The 2008 financial crisis was precipitated by massive mortgage-backed securities fraud, in which corrupt bankers colluded with bond-rating agencies and regulators to trick people into thinking that bonds based on mortgage payments were safe bets.
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It's happening again.
Last year, John Flynn, a senior figure in the commercial mortgage-backed securities industry, filed a SEC whistleblower complaint detailing billions in fraud from Wells Fargo, Deutsche Bank and other major financial players.
propublica.org/article/whistl…
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Last year, John Flynn, a senior figure in the commercial mortgage-backed securities industry, filed a SEC whistleblower complaint detailing billions in fraud from Wells Fargo, Deutsche Bank and other major financial players.
propublica.org/article/whistl…
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These are the same banks that destroyed the world's economy in 2008 and got bailed out. Flynn shows that they've followed the same playbook that they used then, but this time, it's mortgages on commercial real-estate. These loans are packaged as bonds and sold on.
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If the banks can convince investors to buy the bonds from them, they can issue bonds on the basis of cooked financials that hide the fact that the businesses taking out the loans are destined to fail, and then offload the risk onto suckers who'll be on the hook later.
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He's telling the truth. @Propublica pulled paperwork on these loans and discovered properties listed twice under different addresses, lies about historic profits, existing debts omitted, etc. Flynn's found $150B worth of fraud...so far (the market's worth $592B).
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Bankers rely on the fact that no one ever reads the whole prospectus, just the summary (no one, that is, except Flynn).
These companies are mostly doomed, thanks to the coronavirus crisis, but because of this fraud, they'll cost the rest of us MUCH more when they tank.
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These companies are mostly doomed, thanks to the coronavirus crisis, but because of this fraud, they'll cost the rest of us MUCH more when they tank.
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