Monday, August 25, 2008

LaTi: Osama bin Laden Caused the Mortgage Crisis

That's what the Los Angeles Times wants you to think.

LaTi takes readers on a wild ride this morning.

First LaTi tells us that the FBI saw the threat of the mortgage crisis:

Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.

"It has the potential to be an epidemic," Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004. But, he added reassuringly, the FBI was on the case. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said
Of course, the mortgage crisis is a lot worse than a few bad brokers. The FBI may have spotted some bad seeds moving into the mortgage brokerage industry, but they always move into the hot areas. They are probably operating in the homeland security sector, now. The real criminals were the money pumpers, Greenspan and Bernanke.

But Lati wants us to think it was a few morally challenged brokers, so they proceed:

In 2007, the number of agents pursuing mortgage fraud shrank to around 100. By comparison, the FBI had about 1,000 agents deployed on banking fraud during the S&L bust of the 1980s and '90s...

The tepid response reflects a broad realignment of law-enforcement priorities at the Justice Department in which mortgage fraud and other white-collar crimes have been subordinated to other Bush administration priorities...
Of course, the new priorities are to snoop on Americans to see if any are candidates for waterboarding. So we end up with the resource and priority challenged FBI, going after the morally challenged brokers

Absent a major shift in priorities and is likely that the Justice Department and the FBI will continue on their current path of focusing on simple cases...
What does Lati want us to think other than it is all Osama bin Laden's fault, causing the reassignment of agents that were responsible for protectng us against the mortage crisis?

It's a nutty theory, but when you don't know basc economics, that's what you get.

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