How Come No One has been Popped?

The mortgage/housing/subprime mess has cost U.S taxpayers billions of dollars, no doubt. But was the crisis caused by incompetence, greed, fraud or some combination of all three? Former S&L regulator Bill Black (a player in the Lincoln Savings/Keating Five Scandal) points out in a recent email that, "No senior official" at a large subprime lender has been convicted for "making fraudulent loans on behalf of the lender (as opposed to secretly ripping off the lender)." Black, now a professor, points out that "large control frauds" have been severely damaging to the U.S. economy. He adds that, "Despite the FBI (accurately) warning over six years ago that fraud was 'epidemic,' policymakers, economists, and even the financial media have consistently refused to take the role of control fraud seriously. The result has been a disastrous policy response that will make things even more criminogenic." What's a 'control fraud'? Answer: it's similar to a 'bust out' where organized crime gains control of a company using very little real money and proceeds to strip it of its assets. Years ago, Stephen Pizzo and I proposed writing a book about white collar bust outs ('Bust-out America' we called it) but publishers rejected our premise. One well known editor, Star Lawrence, said our tone was "shrill." I still have the rejection letter somewhere. Oh well…