On the mortgage crisis and buffoonish, unethical prosecution.

…of course, despite the title of this post, a spokesperson for the prosecutor’s office called the jury’s verdict exonerating Abacus bank “disappointing.”  But that’s getting ahead of the story.

griftopia-jacket-art_custom-3b0ee977dc36ded900530c1cda11524779faf9d0-s300-c85One of the most disheartening things you’ll learn if you read Matt Taibbi’s Griftopia is that, of all the gigantic banks that perpetrated fraud before, during, & after the mortgage crisis, only one small bank called Abacus was ever prosecuted.  Taibbi described Abacus bank a la Douglas Adam’s depiction of Earth in Hitchhiker’s Guide: mostly harmless.  And yet that small bank, which serviced modest loans to Chinese immigrants, was the target of the full wrath of the New York prosecutor’s office.

No one else’s actions were deemed worthy of indictment.

And that seemed crummy… even in Taibbi’s book (which you should definitely read — it will give you a clear understanding of a major facet of the rot at the core of the contemporary United States, and nobody makes occult financial instruments both lucid and exciting the way Taibbi does), it was clear that the prosecutor’s office was making a big show of nettling Abacus to distract attention from its utter reticence to hold anyone who mattered accountable.

My impression, from reading Taibbi’s book, was something like a gigantic food fight perpetrated by burly football players in a high school cafeteria, after which the lunch room monitor stomps in and grabs a wimply little bystander by the arm and starts shouting “How could you!??” while the kid breaks into tears.  Abacus, clearly, is the wimp.  The prosecutor is the ineffectual monitor too frightened to investigate the real crime.

The ineffectual prosecutor is D.A. Cyrus R. Vance, Jr.  You can contact his office about financial fraud at (212) 335 – 8900.  Good luck getting help, though — they might still be devoting a lot of resources to this Abacus situation.

I just had a chance to read Gretchen Morgenson’s article in July 19th’s business section of the New York Times (“A Tiny Bank’s Surreal Legal Journey”), which makes it clear that the indictment of Abacus was even more of a charade than I’d realized from Taibbi’s book.  Because, yes, a small amount of “fraud” (filling out forms inaccurately to allow people who were known to be good bets to qualify for mortgages… which those people then paid in full, demonstrating that the real crime here is overly strict qualification requirements that were keeping loans away from people who needed & deserved them) was committed at Abacus.

But then the management at Abacus identified it.  Reported it.  Took full responsibility.  Fired the employee responsible.  Fixed everything.  And after the management at Abacus had taken action to fix everything, the information that they had reported about their own bank was used to indict them.


To get back to the food fight analogy… it’s as though the wimpy kid had stayed behind in the cafeteria to help clean up out of sympathy for the janitors, and then the monitor came and tried to pin everything on him.  “You’re here, after all!  A clear sign of guilt!”

So I’d like to offer my apologies, Abacus bank.  I read about your business while sitting in SFO and thought, “What they did doesn’t sound so bad.”  But you deserved more than that.  Abacus bank seems to be extremely ethical, well-managed, and helping an unfairly under-served population.  Not just innocent, but actively good.

Which, because our country has some fundamental problems, means they were the only bank the D.A. went after.

If you have feedback about this post, you don’t really need to use my “Contact Me” page for it.  Why not send your remarks directly to the prosecutor?  Here’s the link again.