Wednesday 2 June 2010
Law and Order: AIG
Another reason we don't prosecute is prison space.
These folks lied about their projected income and borrowed money to bet that assets they bought would go up in value, knowing that - if the assets went down in value - they would not be able to pay back the loans. So if we prosecute these guys, we have to prosecute a significant proportion of the families who let their houses go into foreclosure.
Worse, the ratings agencies and auditors actions are those of many mortgage brokers and banks, so a significant proportion of them would have to be prosecuted, along with everyone at Fannie Mae and Freddie Mac.
In short, if we prosecuted fairly, about 10-15% of America would end up in jail, and we just don't have the prison space for another 30 or 40 million bodies.
These folks lied about their projected income and borrowed money to bet that assets they bought would go up in value, knowing that - if the assets went down in value - they would not be able to pay back the loans. So if we prosecute these guys, we have to prosecute a significant proportion of the families who let their houses go into foreclosure.
Worse, the ratings agencies and auditors actions are those of many mortgage brokers and banks, so a significant proportion of them would have to be prosecuted, along with everyone at Fannie Mae and Freddie Mac.
In short, if we prosecuted fairly, about 10-15% of America would end up in jail, and we just don't have the prison space for another 30 or 40 million bodies.
# posted by Had It in Holland Park @ 21:53 
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