Thursday, September 25, 2008

FBI Official Kenneth Kaiser Comments on the Mortgage Crisis

"[T]he FBI is a law enforcement and intelligence agency, we are not banking regulators...In the end, most economists have attributed the crisis to very aggressive lending practices and too little risk management throughout the financial services industry."--Kenneth Kaiser, Assistant Director of the FBI's Criminal Investigative Division

Like everyone else, our media pundits don't really understand the mortgage crisis very well.

On 8-29-08, FBI official Kenneth Kaiser (pictured above) commented on an article published in the Los Angeles Times (8-25-08) that he felt mischaracterized the causes of the current mortgage crisis.

Mr. Kaiser, the Assistant Director of the FBI's Criminal Investigative Division, explained:

Your 8/25 story on the mortgage crisis ("FBI saw threat of mortgage crisis," L.A. Times, August 25, 2008) implied that if the FBI had made more arrests for mortgage fraud, the crisis could have been averted. To even suggest that is a cry for a lesson in both civics and basic economics.

The story's premise was built around a 2004 quote from an FBI official who said he was confident the FBI could prevent fraud from becoming a massive problem. In context, Assistant Director Chris Swecker meant he believed the FBI could stay focused on mortgage fraud to prevent fraud from becoming the major driver that would cause a collapse of credit in the housing market. We believe by a good measure, the Bureau did that.

The FBI's Criminal Division has arrested 1000 suspects and targeted 180 criminal enterprises since 2004. We targeted those lenders and buyers involved in multiple frauds or cases where the profits went to drug crews, gangs or organized crime. More investigations are ongoing. But the FBI is a law enforcement and intelligence agency, we are not banking regulators.

In the end, most economists have attributed the crisis to very aggressive lending practices and too little risk management throughout the financial services industry. As far as mortgage fraud was concerned, the FBI had the right intelligence and provided the right warnings to the industry, but fraud alone does not appear to be the straw that broke the mortgage camel's back.

In the boom and bust of the mortgage business, to suggest that making more arrests would have averted the mortgage crisis is to confuse the root cause with the side-effects. It is not a fair or realistic assessment.

Kenneth Kaiser

Assistant Director Criminal Investigative Division Federal Bureau of Investigation
(As posted on the Los Angeles Times website, August 29, 2008)

[See also the FBI Mortgage Fraud homepage]

2 Comments:

Anonymous Anonymous said...

added to my rss reader

6:32 AM  
Blogger Defendant and Cross-Complainant in pro per said...

Thank you Snapple for the posting, I copied it verbatim into my complaint, now pending before Inspector General of the US Department of Justice, against Kenneth Kaiser, alleging fraud on the US Congress and the people of the US in refusal to enforce the law in view of criminal conduct at Countrywide and Bank of America Corporation.
Senator Dianne Feinstein has recently issued an inquiry on the DOJ IG - why he would not respond on my complaint.
You may see more on the subject under my blog:

Joseph Zernik, PhD
http://inproperinla.blogspot.com/
http://www.scribd.com/Free_the_Rampart_FIPs
http://www.liveleak.com/user/jz12345
http://www.examiner.com/x-38742-LA-Business-Headlines-Examiner
Please sign our petition - Free Richard Fine: http://www.thepetitionsite.com/1/free-fine
Patriotic pics of Beyonce' Knowles, Sharon Stone, and Charlize Theron,
Coming soon- deep house music!

11:50 PM  

Post a Comment

Links to this post:

Create a Link

<< Home