NEW YORK ( TheStreet) -- Federal regulators are stacking up cases against the big banks over alleged mortgage fraud, but they are still having a hard time finding evidence to prosecute individuals for any wrongdoing.
According to a Wall Street Journal
The settlement is expected to be the first in a series of SEC enforcements against banks involving the sale of mortgage-backed securities, according to the report, citing people close to the probe.
But for critics of the Wall Street culture of reckless risk taking that led to the financial collapse, the SEC's recent practice of entering into similar settlement agreements comes across as weak sauce.Other prosecutors are also coming up short in holding individuals accountable for faulty underwriting practices. New York Attorney General Eric Schneiderman filed a civil fraud lawsuit against J.P. Morgan that alleges widespread fraud by Bear Stearns but does not name any individuals. The U.S. Department of Justice filed a lawsuit for over $1 billion last month against Bank of America (BAC - Get Report) for alleged multi-year mortgage fraud. Manhattan U.S. Attorney Preet Bharara called it "brazen in scope." Yet the suit did not name any individuals as defendants. It did identify two officals who oversaw the faulty mortgage origination process. One of them, Countrywide COO Rebcca Mairone, is now a mortgage lending executive at JPMorgan Chase, as TheStreet reported last month, and is involved with the bank's independent foreclosure review. The Federal Housing Finance Agency is the only regulator that has so far been aggressive in going after individuals. The bank filed a lawsuit against 16 banks last year. In its suit against JPMorgan relating to $33 billion in mortgage securitizations, it named 42 individuals, according to the report The FHFA might actually have a good case against the big banks. Alison Frankel at Reuters
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