Timothy Geithner: Making Executives Rich Again
Stay up to date with the latest headlines via email.
Timothy Geithner's new TALF plan, like all his other plans, seems designed to shovel billions into the coffers of the very same bankers who got rich on the mortgage bubble. When the public gets a glimpse of the tip of this giant iceberg, as they did with the AIG bonuses, they're dismissed as angry rubes who Just Don't Understand How Things Work. But his latest scheme is proof that they are absolutely right.
Despite Geithner's contention that banks are simply "burdened with bad lending decisions," most Americans understand at this point that there was serious fraud involved in the inflation of the mortgage bubble. The Justice Department and the FBI are currently investigating Countrywide for accounting fraud, insider trading and consciously lending money to people they knew couldn't afford to repay it. Meanwhile, AIG is suing Countrywide because they have to pay off hundreds of millions of dollars in insurance claims because Countrywide just flat out lied about the mortgages they were issuing:
United Guaranty said in the complaint that it had reviewed loan files that showed that most mortgages covered by 11 policies for asset-backed securities were either underwritten in violation of Countrywide’s own guidelines or contained defects, such as missing documents, misrepresented credit scores or false social security numbers.
And who has the privilege of paying off AIG's insurance policies? That would be American taxpayers.
Stanford Kurland was the President of Countrywide during its salad days, when the predatory lending practice of low introductory "teasers" inflated Countrywide's mortgage portfolio from $62 billion to $463 billion. Bank of America, which bought Countrywide last year, has already paid out $8.7 billion to settle suits brought by states because of Countrywide's fraudulent practices, including hidden fees and false claims like "no closing costs." The Illinois suit examined one mortgage broker's sales of Countrywide loans and found the "vast majority of the loans had inflated income, almost all without the borrower’s knowledge.”