Monday, January 23, 2012

Still seeking accountability for housing bubble

A story in the Business Section of the Globe detailed the quest of Eileen Foster, a Massachusetts-based former VP at Countrywide to recover judgment for what she alleges was her wrongful termination in retaliation for her internal complaints about Countrywide's lending practices.  Reading the story revived all the memories of shaky borrowers, fictitious financials, and loan originators who were paid based on the size of the loan and interest rate with the likelihood of repayment not even part of the equation.  I still found it astounding that no one has been held accountable for all of these practices.  It seems that the only time attention refocuses in this direction is when the odd, isolated case like the above bubbles up into the public eye.  The New York Times said as much last week in an editorial based on the ongoing prosecution of a single mortgage broker from Queens named Adul Ahmad.  As the Times observed,

Whatever Mr. Ahmad did or did not do, one thing is sure: he did not act alone. The attention Mr. Ahmad has drawn highlights the relative lack of scrutiny of the big banks and their senior executives. Big banks created demand and provided credit for dubious mortgage loans, which they bundled into securities and sold to investors. If not for reckless lending and heedless securitizing, there would have been no mortgage bubble and no mortgage bust — and, in all probability, no Edul Ahmad
At the end of the editorial, the Times speculates that lawsuits of the type recently brought by Massachusetts AG Martha Coakley "may ultimately prove more revealing and helpful to wronged homeowners" than anything done or being done by the Feds.  Still, it's now more than four years since the collapse occurred and that's a long time to wait for some resolution.


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