Subprime: why has no one gone to jail?

Question

I remember that during the corporate scandals of 2003 they did get quite a few fish...

But so far it's been two years since the mortgage crisis and no one is behind bars? We are talking about banks and institutions and individuals that have put the entire American FINANCIAL and even economic system at risk... I think that's reason enough to be locked up!

How come no arrests with so many people losing homes, bank failures and stock market falls?

Answer 1

Because no laws were broken, sure people that should not have had loans got them, banks that should not have approved them did.... But... Unfortunetly for the rest of us  ignorance and arrogance are not law breaking.

Answer 2

Because the people that signed the dotted line are to blame. Granted the companies are at fault as well. At the end of it all though, anyone with a brain would know what they can/can't afford. They chose to buy what they couldn't afford. So if you lock up the other guys, you'd have to lock up the purchasers as well. The Arm's loans particularly, give a detailed payment statement. So obviously people weren't reading their contracts befor buying a home they had no buisness even looking at. Just another modern problem with materialism.

It's everyone invloved thats to blame. Thats why they can't lock certain ones up. They can't afford to take them all to jail. Personally I don't see the sympothetic side. If they didn't have the credit to refi out of the loan...they had no business buying a house to start with.

EDIT* well I agree with your edit. Of course they made things sound better than they were. Thats known as marketing. Same as car dealers/salesmen. They are selling something, they are going to make it sound as good as they can. It still doesn't mean that the people shouldn't read the contract. If the contract doesn't tell you what your buying, under what terms, and for how much...then yes jail time is warranted. I haven't heard of a contract not stating those things thus far though.

Answer 3

They made credit too easy to obtain.  That in itself is not a crime.  Ultimately it is up to the person getting the loan to be responsible for it.  All those papers that are signed at the closing table are legal contracts.  Those include the loan papers.  Ultimately it is the buyer (person getting the loan) who ascertains that the information on that document is correct and truthful.  If any of it isn't, they are the ones responsible for it.  That means they are co-conspirator's if there was fraud.  Imagine the outrage that would happen if the government started going after the people.  The public outcry would be great.  these people will be losing their homes to foreclosure then being charged with fraud for falsifying their loan documents.  Personally, I think that a review of all the loan documentation signed should be part of the "bailout process" that is being discussed and if it is found that the borrower signed false documents they should not be allowed any benefits of the bailout.

Answer 4

OF COURSE there were deceptive practices. It isn't just a mortgage Crisis it's a lending/ credit Crisis. Interest rates are userus. Bait and switch is rife in the lending industry.

I believe there should not only be indictments, but Laws overhauling the lending market from car loans, credit cards, to home loans.  

Less people would be approved, but that's a good thing

Answer 5

Give it time....You will see indictments. Many laws were broken with respect to filling out loans backed by the Feds.

       Attention is being paid  presently on the immediate problem. Only after that concludes will the search for blame start in full force.

         Many frauds were committed in the preparation of loan documentation and phoney tax returns. Many appraisals were  submitted without proper investigation or backing.

         A few principals of major lenders will be prosecuted for allowing their companies to INVITE & ENCOURAGE the fraud committed.

       But this all will be limited by politics. Home buyers believed themselves entitled by their intent to repay and refinance knew the falsity of much of the paperwork submitted on their behalf. Who will increase the burden upon them after having lost a home to foreclosure prosecuting them for lying on government documents.

        We would need to build many more Federal jails for individuals, buyers, brokers, appraisers and others responsible for this financial calamity. What good is the prosecution? It costs almost $100,000 a year to house a minimum security federal prisoner. Is it worth it................?