Mortgages

The mortgage crisis of 2008 has come and gone leaving 324 small fish charged with crimes but not one of the big banks or their executives were charged. As a review recall that the Fair Housing Act of 1968 was designed to stop "red lining", a process of declining mortgage loans to applicants who lived in particular areas. This allowed the government to curb any discrimination in the issuing of home mortgage loans. Things went along okay until the 90's when Clinton followed by Bush decided that the American Dream of home ownership should be available to everyone. Requirements for loans were eased starting first with smaller incomes and assets culminating in what was called NINJA loans. No income, no job and no assets. As these local loans made their way to the Big Banks, the loan inspectors realizing that these loans did not meet the standards of the bank, notified those in charge but nothing was done. The bubble was growing and everyone was making money. The lenders, the real estate developers, the contractors and city real estate taxes rose dramatically. The government kept interest rates low and Wall Street worked with politicians to keep thing growing. In early 2006 Richard Bower, the man responsible for the $90 billion in mortgage loans at CITI Bank began to notify his superiors concerning loans that did not meet the banks standards. The number of loans outside of compliance was 60% in 2006 and 80% in 2007 but still no response from upper management. CITI Bank sold these mortgages to others saying they did meet the companies guidelines. After sending many e-mails to the top officials, including the top dog Robert Rubin, over a period of two years, on Feb 2008 Bower was put on leave and told not to come back to the bank. A few months later in November CITI Bank got a $45 billion dollar bailout from the Feds. Early in 2009 Rubin resigned and left with $17 million in cash and $33 million in stock options. Rubin exposes the problem of revolving doors. He started with Goldman Sachs then Treasury Secretary then to CITI group. Today he serves as chairman for the Council on Foreign Relations.