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Patch_W_Adams's St Louis Blog

by Patch_W_Adams from St Louis

Last Post 17 hours Ago


FBI "Probe" Into Freddie and Fannie
Sep 24, 2008 | 6:10 AM
Category: News
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Key finance firms 'probed by FBI'

The FBI has begun an investigation into four major US financial institutions caught up in the current financial crisis, US media say.

 File image of Freddie Mac sign in front of its headquarters

The US government has stepped in to rescue some struggling institutions

Investigators are reportedly examining possible fraud by mortgage giants Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG.

Top managers at those firms are also being investigated, the reports say.

In the past year, as the US housing market slumped, the FBI began a broad inquiry across the financial sector.

It was prompted by concerns over the way high-risk, "sub-prime" mortgages were being sold.

The FBI has been looking at lenders who sold home loans to buyers on low or unpredictable incomes and also the investment banks that packaged these loans and sold them on.

 

To Read Whole Article Go To:

http://news.bbc.co.uk/2/hi/business/7632790.stm

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Member Comments Total Comments: 2
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sarcasticdragon
Sep 24, 2008 | 2:26 PM

Remember when people used to complain that only rich people could afford homes? How it wasn't fair that Joe Nobody couldn't have the American Dream? So they laxed the rules and approved more high risk loans.

It opened the door to so many people like the parents so they could finally own a home of their own. They did the math and got that home.

But it also opened the door for every dead beat looser to get a home too. And their complete lack of responsibilty is ruining this country now.

Too many people signing stuff they didnt understand or didnt care to understand. They knew good and well they couldnt afford it but they just signed on the dotted line anyway and hoped they would win the lottery by the time the first payment was due.

This is why this country will never be as strong as it once was. Nobody wants to be responsible for themselves anymore. Its all about blaming everyone else and wait for the handout.
Chickenkiller read my blog
Sep 24, 2008 | 11:37 PM

There seems to be a fixation of finding a single individual to pin the blame on for this mess while it actually falls into two separate areas.

First was congress, and the President in the late 1990's passed the American Dream Act which was to promote home ownership and relaxed underwriting standards for loan. Janet Reno in her DOJ threatened lenders with the full legal force of the Federal government, accusing the lenders of redlining if loans were declined. This opened the spigot and bad loans were generated.

Next you have Fannie Mae/Freddie Mac who packaged these loans for sale to investors. There is evidence the heads of these organizations cooked the books to hide bad loans in order for the management teams of these organizations to make their bonuses. However, everyone seems to have forgotten the Sarbanes-Oxley Act which applies to management of publically traded corporations can be fined and imprisoned for failing to disclose items that may adversely impact the financial performance of their companies.

With the FBI investigating, we should see some indictments of these people on charges, but don't count on it as Louie Freh (former head of the FBI is on one of the boards.
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"But war, in a good cause, is not the greatest evil which a nation can suffer. War is an ugly thing, but not the ugliest of things: the decayed and degraded state of moral and patriotic feeling which thinks nothing worth a war, is worse. When a people are used as mere human instruments for firing cannon or thrusting bayonets, in the service and for the selfish purposes of a master, such war degrades a people. A war to protect other human beings against tyrannical injustice – a war to give victory to their own ideas of right and good, and which is their own war, carried on for an honest purpose by their free choice – is often the means of their regeneration. A man who has nothing which he is willing to fight for, nothing which he cares more about than he does about his personal safety, is a miserable creature who has no chance of being free, unless made and kept so by the exertions of better men than himself. As long as justice and injustice have not terminated their ever-renewing fight for ascendancy in the affairs of mankind, human beings must be willing, when need is, to do battle for the one against the other." - John Stuart Mill

Member Since: 4/30/2008


 

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