Citigroup still hiding fraud
Citigroup still hiding fraud

I’m shocked, absolutely shocked that bailing out the banks, not sacking their managers or prosecuting those engaged in fraud has not stopped their bad behavior:

Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans From U.S. Sherry Hunt said her Citigroup Inc. quality-control team was still finding flaws in new loans that included altered tax forms, straw buyers and borrowers who listed fictitious employers.

Instead of reporting the defects to the Federal Housing Administration, the bank saddled the agency with losses by falsely declaring the loans fit for its federal insurance program, according to a complaint filed yesterday by the U.S. Attorney’s Office in Manhattan. Citigroup agreed to pay $158.3 million to settle the claims, and admitted that it certified loans for FHA backing that didn’t qualify. Hat tip: The Big Picture

Wow a $158.3 million penalty. Isn’t this like making a thief hand back only part of what they have stolen?

Citigroup has approved about 30,000 loans with a value of $4.8 billion for FHA insurance since 2004; more than 30 percent of those borrowers have quit paying, the Justice Department said in its complaint. Almost half the bank’s FHA loans originated in 2006 and 2007 have defaulted, the government said, with HUD paying out almost $200 million in insurance claims on mortgages Citigroup originated or underwrote since 2004.

If the crime pays, then it is rational to engage in it. Some people will respond to incentives. Particularly as we have eroded much of our ethical base and replaced it an “It’s not a crime if you can get away with it” attitude. This partly flows from the plethora of laws. Not just those associated with drugs. How about speeding? How about running a red light on a deserted street at 2.00am? How about driving while over the limit? What about some type of petty copyright violation? In total all these laws actually work to undermine the foundations of Western civilization. They have an emergent property quite at odds with their individual effects. It’s a bit like welfare creating welfare dependency, both for individual and corporate “beneficiaries”.

Once the “law abiding” middle class looked upon the police as a source of assistance. Now if they see a police car they often glance worryingly at the speedometer. This is a fundamental change, the ramifications of which are still working their way through our society.

Needless to say at Citibank incentives appear to have worked:

Hunt’s co-workers, instead of checking for fraud or making reports about underwriting defects to the FHA as required, argued with her over the soundness of the loans, she said. Employees who acted as “gatekeepers” applied “what they describe as ‘brute force’ to pressure Citi’s quality control managers” into downplaying defects, according to the government’s complaint.

Some colleagues had pay incentives tied to reducing the number of reported problems, and they spent hours trying to get her to relax her warnings, including those about the most basic deficiencies, Hunt said.

Sad. Particularly given recent history:

Taxpayers rescued the bank with a $45 billion bailout that same year and guaranteed more than $300 billion of its risky assets after the lender’s stability was threatened by mounting costs on soured loans. The bank lost a total of $29.3 billion in 2008 and 2009.

Lest you think it an isolated incident:

MBIA tells judge of newly uncovered Countrywide fraud database Last week Bank of America agreed to pay $1 billion to resolve the Justice Department’s claims that it defrauded the government by underwriting Federal Housing Administration mortgages to unqualified borrowers. MBIA is making similar mortgage-origination allegations about the loans underlying securities it agreed to insure. And in the process it’s demanding discovery that could be of use to all the other monolines and investors clamoring for a pound of the bank’s flesh. Can Bank of America really afford to let this case continue? Hat tip: The Big Picture

There is a post begging to be written on the role of the individual in a corrupt system, but it will have to wait for another time.



41 Comments
  1. loans georgia

    The Road to Hell is Paved with Good Intentions

  2. Google

    Every after in a though we decide on blogs that we read. Listed below are the most up-to-date web pages that we pick out.

  3. a happy wife

    […]just beneath, are a lot of completely not related web sites to ours, however, they may be surely really worth going over[…]

  4. g gasm sex toy

    […]that is the finish of this write-up. Right here you will obtain some internet sites that we think you will enjoy, just click the links over[…]

  5. Healthy food easy to prepare

    […]Here are a number of the web pages we recommend for our visitors[…]

  6. move out cleaning Melbourne

    […]please take a look at the web sites we adhere to, like this 1, as it represents our picks through the web[…]

  7. first butt plug

    […]Sites of interest we’ve a link to[…]

  8. gay sex toys

    […]here are some links to web pages that we link to since we think they are worth visiting[…]

  9. anal butt plug

    […]here are some hyperlinks to web pages that we link to due to the fact we consider they may be really worth visiting[…]

  10. Best-Selling Vibrator

    […]usually posts some extremely interesting stuff like this. If you’re new to this site[…]

  11. sex toys for beginner

    […]we like to honor several other net web-sites on the internet, even when they aren’t linked to us, by linking to them. Beneath are some webpages worth checking out[…]

  12. Bath Bombs

    […]Every when in a even though we select blogs that we read. Listed beneath are the most recent sites that we select […]

  13. cosmopolitan vibrator

    […]please go to the internet sites we adhere to, such as this a single, as it represents our picks through the web[…]

  14. Carpet steam cleaning Melbourne

    […]we came across a cool web page that you just could possibly appreciate. Take a search in the event you want[…]

  15. Get the latest news and information on sports and championship events

    […]that would be the finish of this report. Right here you will find some websites that we assume you’ll appreciate, just click the hyperlinks over[…]

  16. kala jadu

    […]we came across a cool web-site that you simply may well delight in. Take a search in case you want[…]

  17. interior design Singapore

    […]The details mentioned within the report are some of the best accessible […]

  18. clit

    […]we came across a cool web page that you simply may possibly love. Take a search should you want[…]

  19. realistic vibe

    […]one of our guests recently recommended the following website[…]

  20. sex toy

    […]very handful of sites that take place to become detailed beneath, from our point of view are undoubtedly properly worth checking out[…]

  21. Butterfly Vibrator

    […]very few web-sites that transpire to be detailed beneath, from our point of view are undoubtedly properly really worth checking out[…]

  22. Hand Held Massager

    […]that will be the end of this report. Right here you’ll come across some internet sites that we assume you will appreciate, just click the hyperlinks over[…]

  23. Waterproof Vibrator

    […]one of our visitors a short while ago suggested the following website[…]

  24. Orgasm Cream

    […]always a massive fan of linking to bloggers that I appreciate but don’t get lots of link love from[…]

  25. Dolphin Sex Toy

    […]always a large fan of linking to bloggers that I really like but really don’t get a whole lot of link love from[…]

  26. Under The Bed Restraint System

    […]we came across a cool site that you just could love. Take a appear if you want[…]

  27. Best Masturbator

    […]just beneath, are several absolutely not connected web pages to ours, having said that, they may be surely worth going over[…]

  28. toys for couples

    […]Wonderful story, reckoned we could combine a couple of unrelated data, nevertheless genuinely worth taking a search, whoa did one understand about Mid East has got a lot more problerms too […]

  29. sex lubricant

    […]that will be the end of this report. Here you will locate some sites that we think you will value, just click the hyperlinks over[…]

  30. cock sleeve

    […]the time to study or check out the subject material or sites we have linked to below the[…]

  31. http://www.spu.ac.th

    […]Here is a good Weblog You might Come across Fascinating that we Encourage You[…]

  32. Carpet steam cleaning Melbourne

    […]although internet websites we backlink to beneath are considerably not connected to ours, we feel they’re truly worth a go via, so have a look[…]

  33. control premature ejaculation

    […]usually posts some really exciting stuff like this. If you are new to this site[…]

  34. pc games apps free download

    […]please stop by the sites we stick to, such as this a single, because it represents our picks in the web[…]

  35. apps for pc download

    […]very few web sites that take place to be detailed below, from our point of view are undoubtedly properly worth checking out[…]

  36. sex toys

    […]below you will find the link to some web sites that we consider you must visit[…]

  37. robert

    […]please check out the sites we stick to, including this a single, as it represents our picks in the web[…]

  38. quick divorce in PA

    […]Here is a good Blog You may Discover Intriguing that we Encourage You[…]

  39. Boom lift repair miami

    […]check beneath, are some entirely unrelated web-sites to ours, having said that, they are most trustworthy sources that we use[…]

  40. how to use anal vibrators

    […]check below, are some absolutely unrelated internet sites to ours, nevertheless, they may be most trustworthy sources that we use[…]

  41. womens lingerie

    […]Here are a few of the sites we advise for our visitors[…]