FBI knew of mortgage fraud in 2004 but failed to act

[Fredke]

From the LA Times:

Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.

"It has the potential to be an epidemic," Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004. But, he added reassuringly, the FBI was on the case. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.

Today, the damage from the global mortgage meltdown has more than matched that of the savings-and-loan bailouts of the 1980s and early 1990s. By some estimates, it has made that costly debacle look like chump change. But it's also clear that the FBI failed to avert a problem it had accurately forecast.
...
Just as Swecker was making his doomsday forecast, the FBI, under pressure from Congress and the White House, was creating a crime-fighting brain drain, transferring hundreds of agents from its criminal investigations unit into its anti-terrorism program. About 2,500 agents doing criminal work -- 20% or so of the entire force -- were affected.

Standard practice in evaluating the costs and benefits of government regulation is that for every $15 million removed from the productive economy by waste, fraud, or excessive regulation one person dies (because they can't afford health care, safe cars, good food, etc.). By this calculation, the $300 billion or so lost in the mortgage & housing fiasco cost around 20,000 lives, or almost seven times the toll of 9/11.

It's time to get a president who believes in fighting white-collar crime and regulating markets to keep them honest.

[shawndoggy]

that's like saying smoking causes cancer or wearing seatbelts saves lives. Both true, but the FBI is about catching criminals (and since 911, terrorists), not white collar schemers. As for the $15M statistic, does that mean someone like Warren Buffet or Bill Gates is responsible for overpopulation of the planet?

[Fredke]

Originally Posted by shawndoggy

the FBI is about catching criminals (and since 911, terrorists), not white collar schemers.

D'oh! How could I forget that fraud is no longer a crime!