Subprime Lenders (and Wall Street Players) Facing Increased Federal Scrutiny
The meltdown in the subprime market is slowly rapping up as 100 percent loans and loans to those with damaged credit have dried up in the marketplace. So what next, it is time for the Federal bureaucrats to come charging in and start their investigations. The SEC announced yesterday they are commencing on a broad look at the Subprime sector including the big Wall Street firms that have been active in securitizing these loans.
Isn’t it amazing that the government has decided to investigate these issues now, after the free market has already recognized the issue and is rapidly correcting itself? The government could have launched these investigations a year or two ago and they would have been very effective.
Instead, they will just create a media storm, go after a couple of parties to make an example of (and to justify the cost of their investigation), and issue some new guidelines that will adversely impact the marketplace that has self corrected already.
That is why I am such a big fan of big government.
It has been known that the SEC was examining accounting practices at New Century Financial Corp., the nation’s second-largest maker of subprime mortgages – higher-priced home loans for people with tarnished credit or low incomes.
But comments by SEC Enforcement Director Linda Thomsen on Monday were the first public acknowledgment that the agency was involved in a broad examination of the subprime sector within the mortgage industry.
“We’re looking at subprime,” Thomsen told reporters following an address to an investment conference. “. . . As with anything, we’re going to look at all the actors and their roles.”
She declined to provide further details. The SEC as a rule does not comment publicly on current investigations.
The role of major Wall Street investment firms in the subprime market debacle also is under scrutiny. In Massachusetts, the state’s top securities regulator said last week that he had issued subpoenas to two major firms – UBS Securities LLC and Bear Stearns & Co. Inc. – as part of an investigation into whether their analysts’ research ignored subprime lenders’ mounting financial problems.
The Bush administration’s housing secretary, Alphonso Jackson, disclosed last week that the government was preparing to punish some subprime mortgage lenders that have been under investigation for discriminatory practices. He did not name the companies. HUD’s Office of Fair Housing has brought several cases against mortgage lenders and insurers for predatory practices, and those enforcement efforts are continuing, the department said. via Bradenton Herald
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Comment by Sam Chapman on 20 March 2007:
The foreclosure rate in Texas is higher than the national average. I’m sure a lot of us saw this subprime bust coming. I’m afraid that even though the Texas real estate market is pretty hot, this could cool some things. I feel sorry for the home owners who were suckered into the “sweet deals” that these lenders were offering.
Comment by Esko Kiuru on 20 March 2007:
The Federal Government has tasked multiple regulators to oversee the mortgage market and not one of these agencies raised earlier any kind of a flag, red or yellow or whatever color means warning, to the brewing problem. One is just wondering why is that? Now they are looking into it when it’s too late.
The second issue is that institutional investors kept bying these subprime mortgage securities as if they had blinders on. Supposedly they are professionals who understand risk and know how to evaluate it. No doc loans, option ARMs, they bought it all. What a mess!
Comment by Brian Hite on 22 March 2007:
Lenders will even accept paperwork that is incomplete, has forged signatures, wrong dates, blatant fraud, concocted incomes, etc.. etc… Plus, all parties; such as, the broker, the title agent, the appraiser, the insurance company, attornies who are not present, etc… all work in collusion with someone inside a MAJOR lender to defraud the buyer and the lending institution. It happens everyday in Illinois and nobody in the government cares at ALL. OBVIOUSLY.
They are too busy with real problems, LIKE BANK ROBBERIES…..GET REAL!!!!!!! The amount of real estate fraud in one day is more than all the bank robberies in the USA for 10 yrs. It makes one wonder how much the US government really cares about individuals’ Constitutional Rights? The poor are exploited by the rich and the government could care less. Therefore, a wealthy real estate con artist has more rights than the poor and often helpless victim because the GOVERNMENT DOES NOT CARE about PEOPLE!!!!!!! WHO IS GOING TO DO SOMETHING??? WHEN??? NEVER???
Think about all the families and children who are ruined, devastated and helpless. Maybe God himself will swoop down and kill ‘em all? It seems like the best choice is for holy vigilante justice or something as ridiculous as that may sound. But it is our only hope. LOL at the US Government and their uselessness for us, ‘we the people…” SAD BUT SO VERY TRUE. It is easier to go to jail by forgetting to pay a traffic ticket then it is to steal millions of dollars from fraudulent real estate transactions. This country is undoubtedly NOT run by the people, for the people. I think we should take God’s name off of all US currency… He is probably pretty pissed off by now! I bet Iraq has a better real estate institution than us… George Bush probably is all over THAT! This problem is so deep that NOBODY wants to deal with it because the joke is on us, the people of the United States of America who are powerless to corporate fraud, collusion and blatant deception. I care about children and families being ruined by grifters and con artists? Does anybody else care? OBVIOUSLY NOT!!!!!!!!!!!!!!