Control Fraud


Control Fraud

By: Jim Macklin
Secure Document Research

The term “control Fraud” was originally coined by Professor William Black, UMKC. A control fraud essentially starts as a core methodology for the exaction of some enterprise or movement, whether in commerce or at law. The instigators of a control fraud typically have their own self-interests as the motivation for participants to either ignore regulations or laws, or worse yet, to politically pressure or lobby for policy change that suits their agenda(s).

It mattered not that “liar loans”, defective underwriting processes, and securitization obviations were the norm during the run-up to 2008. The control fraud was in place to facilitate complete immunity from prosecution for the big money players at the top of Wall St. Every associated business that derived its income from the mortgage-backed bond sales was expected to follow the guidelines, as set by the fraudsters, or suffer the fate of not working. Everyone from bond insurers, hedge fund managers, realtors and property appraisers had to bend to the poisonous curve…or lose their competitive edge, and thus, their livelihood. When lying becomes the standard upon which your paycheck relies, you are a liar by proxy.

Some of the worst offenders included WaMu, Countrywide Home Loans, Lehman Brothers, and the usual suspects. The Office of the Comptroller of the Currency (OCC) had to issue Cease & Desist Consent Orders to reign in the counter-punch of the foreclosures that ensued after the fraud was complete. The pie’ce de’ resistance of the fraud was the systematic taking of property that had been artificially inflated by the use of the fraudulent appraisals. The proof of the fraud lies in the last four years of deflating property values back down to pre-2000 rates. Interestingly, it was 1999 that saw the de-regulation of the markets thanks to President Clinton’s benchmark decisions.

We now face seemingly impossible odds in that the current home markets are being touted as “rising”, while jobs and unemployment oppose the notion that “all is well”. The Fed is stuck with kicking the marginal can down the road. If they attempt to raise the level of lending rates, the economy will most certainly stall. If they maintain zero percent lending to the banks when practically no new housing starts are anticipated in the near future, and at the same time, because of impending liabilities on their balance sheets, banks and servicers are anxious to continue to foreclose and sell off assets to entities like Blackrock in a last ditch effort to scramble for cash, we are doomed to repeat the past…and soon.

I predict that 2013 will be the true winter of our discontent, followed by a spring filled with flat markets and a major correction in the equity markets that will, once again, stun the conscience. Thank you Wall St. and all of your ingenuity. You have shown us how to save nothing, spend our future security on frivolous notions of derivative pipe dreams and believe that our houses can act as a piggy bank based on bullshit appraisals. Thank you for quantitative easing, austerity, equity splits and more laws in favor of financially ferris-wheeling our children’s educations. The carnival barker howls out a more sound fiscal policy when he screams: “step inside and see the bearded lady”…at least she exists, she’s ugly, but she exists.

Stay tuned