Danny Schechter - ColdType

10. Fannie Mae and Freddie Mac expanded beyond their
traditional scope of business and entered the subprime
market, ultimately costing taxpayers hundreds of billions of
dollars.
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11. The abandonment of antitrust and related regulatory
principles enabled the creation of too-big-to-fail megabanks,
which engaged in much riskier practices than smaller banks.
12. Beset by conflicts of interest, private credit rating companies
incorrectly assessed the quality of mortgage-backed
securities; a 2006 law handcuffed the SEC from properly
regulating the firms.
That pretty much sums it up. There is more of course,
including new rules that motivated agencies to seek financial
settlements to avoid prosecutions in practices deemed harmful
to consumers or investors.
This leads us to the current moment where the Obama
Administration is caught up in the contradictions of the financial
crisis – colluding with many of the institutions and individuals
responsible for it, and at the same time committed to
financial reforms and economic recovery. The reform rhetoric is
often in collision with the power of an industry that wants to
control what changes, if any, are to be made. There is another
danger, that fraudsters may target the bailout and stimulus
programs like TARP. That’s the expectation of the “top cop” on
this beat, as the Los Angeles Times reported:
The TARP itself may be the biggest fraud of all, but Inspector
General Neil Barofsky said today that he’s already examining
20 potential cases of criminal fraud having to do with the
program.
Barofsky said the complex nature of the bailout program
makes it “inherently vulnerable to fraud, waste and abuse,
including significant issues relating to conflicts of interest
facing fund managers, collusion between participants, and
vulnerabilities to money laundering.”