Comment by nipponese
6 months ago
Well, there were the thousands of fraudulent NINJA loans made by individual applicants who lied.
But then you have to ask if the institutions doing the application verifications were criminally negligent.
6 months ago
Well, there were the thousands of fraudulent NINJA loans made by individual applicants who lied.
But then you have to ask if the institutions doing the application verifications were criminally negligent.
> But then you have to ask if the institutions doing the application verifications were criminally negligent.
That wasn't negligent. It was intentional.
Not by the institution, but by the officers acting against the interests of the institution.
A tiny example out of so many: it is against the interest of a secured lender to inflate appraised value or allow them to be inflated.
Yet, starting at 2004, appraisers across the country started reporting that they were being pressured to inflate appraisals and blacklisted when they refused.
This is clear indication of fraud against the institution and regulators. There is simply no honest reason to inflate appraisals.
> Not by the institution, but by the officers acting against the interests of the institution.
The institution made a bunch of money. In the ghoulish way banks behave, the institutions interests are only making money. The officers were acting in the interest of the institution the way they understand them.
Criminal negligence laws only apply to physical harm, not financial losses.
I believe a similar concept exists in finance, as part of fiduciary duty. It's called duty of care in that context.
"The American Law Institute’s Principles of Corporate Governance defines the duty of care as the duty by which a corporate director or officer is required to perform their functions in good faith; in a manner that they reasonably believe to be in the best interests of the corporation; and with the care that an ordinarily prudent person would reasonably be expected to exercise in a like position and under similar circumstances (negligence standard)."
https://www.law.cornell.edu/wex/duty_of_care
Again, that's a civil issue not criminal. In theory some lenders might have been able to file civil lawsuits against some of their own employees to claw back part of their bonuses or whatever, but that would have been pointless.
1 reply →
Sadly. There are som many negligent acts we need to prosecute.
The abbreviation you want is TBTF.
Should I understand that you think accountability for the fraudulent loan applicants was just a form of efficient markets under a broken institutional system?
I don't understand this question, sorry.