According to Aaron Task:
In the wake of the bursting of the housing bubble, you'd think there'd be a significant number of investigations into criminal wrongdoing and accounting fraud, similar to what occurred after the S&L crisis and bursting of the stock bubble in 2000.
But two years into the crisis the FBI "doesn't have a single major conviction or indictment of anyone," notes William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City. [see Bill Moyers interview with William Black on 'Bill Moyers Journal', April 3, 2009]
Black, who was counsel to the Federal Home Loan Bank Board during the S&L crisis of the 1980s and blew the whistle on the "Keating Five" in 1989, reiterated what he told us in November: Though the FBI warned of an "epidemic" of mortgage fraud in 2004, they subsequently made a "strategic alliance" with the Mortgage Bankers Association, which Black calls the "trade association of perps."
Indeed, as much as 80% of the fraud during the boom was "induced by the lenders," who either encouraged people to lie on loan applications or actively altered documents to make them more likely to be approved, says Black.
How extensive was the fraud?
"There was the appearance of fraud or misrepresentation in almost every file," Fitch Investors declared in late 2007 after reviewing nonperforming subprime MBS (the same stuff they, S&P and Moody's rated triple-A).
Black estimates there are as many as 500,000 cases of mortgage fraud that need to be investigated. Furthermore, such extensive mortgage fraud led to accounting fraud, which led to securities fraud at any/all publicly traded mortgage lenders. As with the FBI, the SEC was "completely ineffective" in stopping such crimes, much less investigating them now, he says.
Among the biggest mortgage lenders, IndyMac was put into FDIC receivership, Countrywide was acquired by Bank of America, Golden West was acquired by Wachovia, and WaMu was ultimately acquired by JPMorgan.
This is relevant because the government's current practice of keeping banks' senior management and boards intact (unlike, say GM's) is effectively prohibiting any investigation of possible (likely) wrongdoing at those firms.
It is for these reasons Black says the FBI's current level of 800 cases per year is "no longer symbolic prosecutions, it's shambolic prosecutions."