This piece from Lisa Madigan, Illinois Attorney General lays it out there:
“Rather than show remorse, Wall Street and the big banks are on the offensive. They are lobbying furiously to weaken any real financial reforms at the federal level. They continue to blame the victims. They want you to believe that millions of scheming Americans took advantage of innocent mortgage lenders to purchase homes they knew they could not afford.
That simply isn’t true. In fact, an FBI study indicates 80 percent of mortgage fraud was committed by the lenders. A recent U.S. Senate investigation confirmed it. Eighty-three percent of loans originated by one of Washington Mutual’s top producing retail loan officers were fraudulent.
Most of these failed loans were refis. Many were home-equity loans taken out by seniors who had long ago paid off their mortgages. I’ve repeatedly seen unscrupulous lenders use every con in the book to charm and lie to homeowners. Lenders actually paid brokers a premium to put people in higher-priced loans with toxic features, such as adjustable rates and prepayment penalties.
Strip away the purposeful confusion and here’s what really happened: Big banks and Wall Street engaged in a gigantic equity-stripping scam and gambled with the profits they extracted from hardworking Americans. And like in a real casino, many of the gamblers didn’t stop until their wallets were empty.
But unlike a real casino, the big players knew they wouldn’t walk away destitute. They knew they were too big to be allowed to fail simply because their luck ran out. They knew the government would use our money to bail them out – consequences be damned.
Your mortgage shouldn’t have been treated as a wager – it should be a way to provide a home and financial stability for you and your family.”