While this is an interesting first step, the DOJ and the media are still overlooking the most basic fatal flaw in the sale of mortgage backed securities, to wit: the certificates were not mortgage-backed, and in fact were bogus certificates from a non-operating entity controlled by the Investment Bankers. It was the perfect crime — invent a company, do an IPO and keep the proceeds.
The Trusts were created on paper but never used, never funded, and never did any business. In fact they never had a bank account. The certificates were sold as securities and were not protected by exemption because while they claimed to be mortgage-backed, they were not.
So the issue of the bad loans that were being hyped by the “ladders” of conduits and sham entities is the second point, not the first. The DOJ needs to do what people in litigation have been…
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