http://www.richardmbowen.com/were-ba...nt-of-justice/

jon_banquer wrote:
http://www.richardmbowen.com/were-ba...nt-of-justice/


This court case was about fraud in regard to
misrepresentation in the prospectus of securities
sold to Freddie and Fannie.

The other cases were civil suits that were getting the
banks to honor the "Rep and Warranty" clause of
the loan sale agreement. Those settlements don't shield
those banks from further prosecution on fraud charges.


Here is an analogy:
There is no doubt that some car dealers sell cars
that they know are defective. That may be fraud, but
if the car sale comes with a warranty you are
going to use the warranty to get your money back
instead of trying to pursue fraud charges.

All loans sold to Freddie and Fannie came with
a warranty that the loan documentation was
accurate. If later the documentation turned out
to be inaccurate the seller (loan originator) was
required to buy back the loan or cover the losses.

When F&F bought mortgage backed securities they
don't have standing to sue the loan originator
under the "rep and warranty" clause. That is
why this case is different. This suit is brought
under the Securities Act. As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.

On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are the
damages/fines a tax deductable business expense? If so it
means that the other taxpayers will subsidize 1/3 of the
fines/damages.


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"

On Monday, September 28, 2015 at 4:21:22 PM UTC-4, F. George McDuffee wrote:
On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are
the damages/fines a tax deductable business expense? If
so it means that the other taxpayers will subsidize 1/3 of the
fines/damages.

Law professors might say that it would make more sense NOT to prosecute " wealthy but guilty " wall street bankers and their friends provided that they make a large donation to charity.

Does that make sense to you?

F. George McDuffee wrote:
On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are the
damages/fines a tax deductable business expense? If so it
means that the other taxpayers will subsidize 1/3 of the
fines/damages.


Damages haven't been settled yet.

This case is different. In previous suits the basis of
the suit has been the written warranty that accompanies
loans sold to Freddie and Fannie. The warranty states that
the loan documentation must show that each loan meets GSE
guidelines and if it later turns out the documentation was
false then the seller is obligated to buy back the loan or
take the losses.

In this case the basis is security fraud - misrepresenting
the loans that were contained in securities purchased by
Freddie and Fannie. Not only are the companies that created
and sold the securities being sued but the officers
who were responsible are also being sued. It will be
interesting to see to what extent the officers are
held personally liable.

On Monday, September 28, 2015 at 3:03:39 PM UTC-7, wrote:
F. George McDuffee wrote:
On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are the
damages/fines a tax deductable business expense? If so it
means that the other taxpayers will subsidize 1/3 of the
fines/damages.


Damages haven't been settled yet.

This case is different. In previous suits the basis of
the suit has been the written warranty that accompanies
loans sold to Freddie and Fannie. The warranty states that
the loan documentation must show that each loan meets GSE
guidelines and if it later turns out the documentation was
false then the seller is obligated to buy back the loan or
take the losses.

In this case the basis is security fraud - misrepresenting
the loans that were contained in securities purchased by
Freddie and Fannie. Not only are the companies that created
and sold the securities being sued but the officers
who were responsible are also being sued. It will be
interesting to see to what extent the officers are
held personally liable.

Time to jail no good, corrupt, bankers.

On Mon, 28 Sep 2015 15:21:14 -0500, F. George McDuffee
wrote:

On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are the
damages/fines a tax deductable business expense? If so it
means that the other taxpayers will subsidize 1/3 of the
fines/damages.

I suspect that fines, legal costs, etc., are considered as corporate
expenses. At least I have seen footnotes in company's financial
statements about amounts specified as "funds held pending finalization
of XYZ matter, where XYZ was a claim against the company.
--
cheers,

John B.

On Mon, 28 Sep 2015 14:54:18 -0700 (PDT),
wrote:

On Monday, September 28, 2015 at 4:21:22 PM UTC-4, F. George McDuffee wrote:
On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are
the damages/fines a tax deductable business expense? If
so it means that the other taxpayers will subsidize 1/3 of the
fines/damages.

Law professors might say that it would make more sense NOT to prosecute " wealthy but guilty " wall street bankers and their friends provided that they make a large donation to charity.

Does that make sense to you?

No -- because it leaves the "bad apples" in place, perhaps
to do better (for themselves) next time, and has minimal
deterrence effect on others, who may be tempted to engage in
similar bad conduct. Operationally this is simply a tax for
getting caught.

Far better to use the existing power to ban an individual
from employment in the financial services sector (combined
with asset disgorgement), for periods up to life, with
public announcements of the bans required, such as the
exchanges where they did business, and/or in their
professional trade journals, in order to "name and shame."

This also suggests imposition of a system of progressive
licensure, with examinations to prove minimum initial
competence in their field, with periodic mental and physical
evaluations, including drug testing, analogous to that
required for commercial pilots, would be helpful.


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"

On Tuesday, September 29, 2015 at 8:58:59 PM UTC-4, F. George McDuffee wrote:
On Mon, 28 Sep 2015 14:54:18 -0700 (PDT),
wrote:

On Monday, September 28, 2015 at 4:21:22 PM UTC-4, F. George McDuffee wrote:
On Mon, 28 Sep 2015 08:04:22 -0500, jim
" wrote:

snip
As far as I can tell
the result will be the same - there will be
damages awarded and no one will go to jail.
/snip

======================
Where does this money go and how is it tracked? Are
the damages/fines a tax deductable business expense? If
so it means that the other taxpayers will subsidize 1/3 of the
fines/damages.

Law professors might say that it would make more sense NOT to prosecute " wealthy but guilty " wall street bankers and their friends provided that they make a large donation to charity.

Does that make sense to you?

No -- because it leaves the "bad apples" in place,
perhaps to do better (for themselves) next time, and
has minimal deterrence effect on others, who may be
tempted to engage in similar bad conduct.

Its sad, but the world is always going to have bad people like billionaires, lawyers and tax collectors. Now two of the bad apples, billionaires Bernie Madoff and Robert Durst were caught. I don't know of any others that were ever caught.