Friday, May 08, 2009

Banks defrauded themselves

That's amazing! What's amazing? The LA Times has the capability to do some investigation and analysis.

"The banks were "enablers that bankrolled the type of lending threatening the international financial system," according to the study being released today by the Center for Public Integrity, a Washington-based watchdog group.

"What happened to our largest financial institutions was very much a self-inflicted wound," said the center's executive director, Bill Buzenberg. "These banks owned many of the subprime lenders and financed their lending in order to get bundles of mortgage-backed securities that they could sell, reaping enormous profits."

The report noted that investment banks Lehman Bros., Merrill Lynch, J.P. Morgan and Citigroup "both owned and financed subprime lenders," and that others, including Goldman Sachs & Co. and Swiss bank Credit Suisse First Boston, were major financial backers of subprime lenders.

"It has a history," Davis said. "Subprime was driven by greed and big commissions, rather than by customer relationships." Another problem, Davis said, was that California and most other states have relatively weak supervision of mortgage lenders, which are not regulated like banks."

[Article] Banks pilfered from their own pockets

1 comment:

  1. People say that if we had more regulation this never would have happened. The financial industry is the most regulated industry behind power, yet Bernie Maddoff was able to pull of his huge scheme. The whole system is flawed, so more regulations on a rigged/ponzi scheme system won't help anything. What we really need restoration of sound money and an end to partial reserve banking. This NEVER would have happened with sound money and no partial reserve banking.