David Fiderer: Financial Regulations Meaningless Without Gov't Vigilance

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http://ctwatchdog.com/2010/08/07/financial-regulations-meaningless-without-govt-vigilance

Financial Regulations Meaningless Without Govt Vigilance
By David Fiderer | Last updated Aug 7, 2010, 7:23 pm

Past is prologue, and everything you need to know about the financial meltdown can be gleaned from a single article published more than five years ago in The Los Angeles Times .

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The story explains how fraud had gone viral at the nation’s largest subprime lender, Ameriquest Mortgage Company. “In court documents and interviews, 32 former employees across the country say they witnessed or participated in improper practices, mostly in 2003 and 2004. This behavior was said to have included deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers’ income to qualify them for loans they couldn’t afford.”

The most important part, the part that explains everything, is not contained within the text. It’s the reaction that ensued thereafter. Nobody cared. Nobody who mattered, anyway. Sure, the article was picked up by the Associated Press and some other papers piggybacked off of the initial reporting by Mike Hudson and E. Scott Reckard. But the gatekeepers of the financial system ignored the story and its broader implications.

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The financial media didn’t really care either. Neither The Wall Street Journal, nor CNBC, nor Forbes, nor Fortune, nor BusinessWeek gave the story much if any play in the year following the story’s release on February 5, 2005.

Most importantly, the heavy hitters in the government didn’t give a damn.

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The fraud was easy to find if you were willing to look for it...

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