Wall Street Bankers Who Made Billions from the Foreclosure Crisis Trying to Buy Their Way Out of Criminal Prosecutions

Wall Street Bankers Who Made Billions from the Foreclosure Crisis Trying to Buy Their Way Out of Criminal Prosecutions

WASHINGTON – Major banks that reached the $25 billion settlement with government officials have attempted to negotiate a deal where federal and state prosecutors agree not to press

Mortgage fraud

Bankers Can't Avoid Criminal Prosecution

criminal charges against them.  Several state and federal prosecutors have balked at this agreement.

Banks cannot buy their way out of criminal charges for fraudulent or abusive foreclosure practices, indicated U.S. Attorney General Eric Holder.

While scores of homeowners across the nation have lost their homes to foreclosure, very few bank executives have been charged with criminal wrongdoing. During the housing bubble, many banks are thought to have engaged in improper or even criminal practices in connection with originating or servicing mortgage loans.  Bankers received record bonuses while homeowners struggled to pay increasingly high monthly mortgage payments.

The collapse of the real estate bubble in 2008 brought with it the much-maligned TARP program, where the American taxpayer bailed out the same Wall Street bankers that profited from the creating the bubble.  Shortly after the bailout, many Wall Street firms paid tens of millions of dollars in bonuses to their bankers.  The government has been slow to criminally prosecute the Wall Street fat cats.  Instead, prosecutors only went only after small time house flippers.

Holder warned the five major U.S. banks that the settlement will not prevent authorities from criminally pursuing them in separate enforcement actions.

The $25 billion offered by the banks will cover less than 5% of the more than $700 billion of underwater mortgage debt.

A.G. Eric Holder

U.S. Attorney General Eric Holder

Banks have attempted to obtain a release from criminal prosecution as part of the settlement.  Many state attorney generals have balked at this attempt.  It appears state and federal prosecutors are belatedly contemplating filing criminal charges against some of the participants to the 2008 foreclosure crisis, at the pressure of the American public.

So far, criminal charges have only been filed against a handful of Credit Suisse bankers who are accused of lying about the value of mortgage-backed securities they were selling to other financial institution just as the crisis was growing.  Other federal agencies have not fared any better.  The Securities and Exchange Commission has yet to file civil lawsuits against banks and other Wall Street bankers, while the Federal Deposit Insurance Corp. has only filed negligence charges against former officers and directors of failed banks.


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