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HomeFCIC Should Ask Bear Stearns Execs About EMC Mortgage
Posted by Larry Doyle on May 5, 2010 12:04 PM |
Will America ever truly learn the full extent of fraudulently underwritten mortgages that lie at the foundation of our overall economic crisis?
Aside from a less than fully transparent hearing with executives from Washington Mutual, the Financial Crisis Inquiry Commission (FCIC) has not drilled down to fully expose the fraud within these mortgages. Former bank regulator William K. Black recently highlighted the pervasive nature of this fraud in an interview with Bill Moyers.
Why doesn’t the FCIC dig deeper to reveal which firms were involved with this activity?
The FCIC is not upholding its charge to fully expose the root causes of our crisis if it does not take this path. To this end, the FCIC should require Bear Stearns executives facing the music today to open the books of an outfit known as EMC Mortgage. What does this originator have to do with the crisis? EMC was owned and operated by Bear Stearns. Let’s navigate further.
How did Bear benefit from owning EMC? In short, the mortgage collateral originated by EMC provided a wholesale source of product which they in turn packaged, securitized, and distributed. For Bear executives to blame the crisis on market rumors and other weak excuses is a continuation of the shirking of responsibility by Wall Street management. Make no mistake, the core of the Bear Stearns culture was greed. That greed drove Bear’s management to allow EMC to originate some highly questionable and likely fraudulently underwritten products. Bear’s senior management was also exceptionally arrogant.
If the FCIC wants to be deemed credible, they should drill Bear on this topic. They should do the same to the crowd from Lehman in regard to its mortgage operation known as Aurora.
While topics of lax regulation, phoney ratings, excess leverage, and insufficient disclosures are all key factors in our crisis, they are secondary to fraudulent mortgage underwritings.
America needs to learn more of what was going on at EMC, Aurora, Countrywide Mortgage, Washington Mutual, and Wells Fargo Mortgage if it truly wants to understand how, why, and to what extent our country got into this crisis.
LD
