Local commentary on the $700 billion bailout
Baltimore-area attorney Mike Morin put in his two cents recently with a letter to Rep. John P. Sarbanes. He's kindly letting me share it with you:
I am one of a number of attorneys in Maryland who have been fighting mortgage fraud, foreclosure fraud, and foreclosure rescue fraud for a number of years.
While I am normally not in favor of government bailouts of Wall Street con-artists, I do believe that immediate, drastic action is necessary in view of the mortgage and credit crisis. However, it is inconceivable to me that the federal government would consider the latest bailout without a provision (and funding) for the FBI to investigate the mortgage brokers and lenders who have actively been creating the “liar loans” that are at the heart of the problem. Everyone, including the willfully blind on Wall Street, have known for years exactly what is going on.
Does anyone in Congress really want to preclude this problem in the future? Investigate and prosecute every mortgage broker and lender involved in a fraudulent transaction. I am certain that a conviction and restitution to the government — restitution that is not dischargeable in bankruptcy — would make a lasting impression.
... Both Maryland state agencies and the FBI are doing great work; however, they are not funded to do more than scratch the surface of the problem.
What do you all think of the $700 billion proposal? What would you change, if anything?
EDIT at 7:50 p.m.: Speaking of the FBI and lenders, I just noticed this AP story:
The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration.
Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc., and insurer American International Group Inc.