I don’t know about you, but doesn’t it seem that every player who sold subprime loans knew exactly what they were selling? Fraud?
Like everything else this will NOT lead to any criminal charges. Same old dance.
iWATCH News-
Federal authorities are investigating possible fraud at General Electric Co.’s former subprime mortgage arm amid increased public pressure to hold Wall Street accountable for its role in the financial crisis.
The FBI and the U.S. Justice Department are looking into potentially criminal business practices at Burbank, Calif.-based WMC Mortgage Corp. during the home-loan boom, according to four people with knowledge of the investigation. They declined to be identified because of the sensitivity of the investigation.
GE’s slogan couldn’t have been much truer than this.
The D & O Diary-
In a January 12, 2012 opinion that quotes from (and relies upon) former Treasury Secretary Henry Paulson’s credit crisis memoirs, Southern District of New York Judge Richard Holwell granted in part and denied in part the motion to dismiss in the subprime and credit crisis related securities class action lawsuit that investors had filed against General Electric, certain of its directors and officers, and its offering underwriters. A copy of Judge Holwell’s opinion can be found here.
Background
As discussed in greater detail here, the plaintiffs first filed their action in March 2009, alleging that the company had failed to disclose information regarding the company’s health and the health of its financial subsidiary, GE Capital, at the height of the financial crisis. As Judge Holwell summarized it, the plaintiffs allege that “during a time when the financial markets were crumbling and companies across the United States were scrambling to disclose their holdings in subprime loans, GE withheld information regarding its substantial holdings in subprime and non-investment grade loans and touted GE as safe in comparison to its competitors, despite the fact that GE was also feeling the impact of the financial crisis.”
Michael Hudson, continues his great series into the subprime fraud mess, this time GE’s turn!
iWATCH-
For General Electric Co., hawking subprime mortgages was a long way from making light bulbs and jet engines.
That didn’t stop the industrial giant from jumping into the subprime business in 2004, lending blue-chip respectability to the market for risky home loans by paying roughly half a billion dollars to buy California-based WMC Mortgage Corp.
What GE got in the bargain, former WMC employees say, was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans. WMC’s top salespeople earned a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys.
On April 10th 2011, 250 religious leaders and homeowners from VOICE (Virginians Organized for Interfaith Community Engagement) gathered in Manassas, Virginia to launch a campaign to hold key financial institutions accountable for the foreclosure crisis in northern Virginia. They are demanding bank executives streamline the mortgage modification system, fund non-profit housing counselors, and rebuild devastated communities (led by the worst lender in Prince William County, Manassas, and Manassas Park – GE and Jeff Immelt).
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