February 14, 2014 § Leave a comment
The Financial Times has a very interesting profile of former Bakersfield real estate guy Carl Cole, who’s about to start a long stint in prison for mortgage fraud during the bubble.
That time is well deserved, as the FT shows, but it’s yet another reminder of how the relatively small fry have gotten pinched after the crash, while everyone on Wall Street remains free.
At first, it looks like the paper will get into this critical angle, getting in a great line in the third paragraph about how “banks that cheat people pay fines, but people who cheat banks do time.”
But the FT never really gets there, ultimately letting Wall Street off the hook as if it were a victim of the mortgage-fraud frenzy.
Here’s the critical passage (emphasis mine):
It felt great because Crisp & Cole had become connected to a higher power – Wall Street. The firm sat at the local end of a global supply chain. Its scores of employees were creating hundreds of mortgages a year for banks, which were then packaging the home loans into securities sold to investors around the world – the ultimate source of most of the money used to fund US house purchases, then and now.
The conceit of the bankers involved in this trade was that the mortgages they were buying were a kind of commodity – like the crude coming out of a Bakersfield oil well. But the grist for the mortgage-backed securities mill was paper – and lots of it: income verification statements, appraisals and other documents prepared by human beings at firms such as Crisp & Cole.
This put local real estate people in a position to pull the wool over the eyes of Wall Street. read more
PHOTOGRAPH: Stanley Kubrick