Kickbacks are Just Distractions at an Acceptable Cost
Last Thursday, the Consumer Financial Protection Bureau hit the nation’s four largest mortgage insurers with a total of $15.4 million in fines for “allegedly” paying kickbacks to lenders to steer business their way. Of course, they didn’t have to admit they did it, and therefore, they didn’t do what they were fined for.
Back in the summer of 2009, the Inspector General of the Department of Housing and Urban Development handed the Justice Department evidence that laid bare a scheme by lenders (the usual suspects: Citigroup, Wells Fargo, Countrywide, and so on) to get kickbacks from mortgage insurers for making borrowers – who had to buy mortgage insurance – purchase coverage from those companies kicking back profits to lenders. In the industry, it’s called “forced placement”
Who did what here?
One estimate of the amount of kickbacks is $6 billion. But the Big Four insurers were only fined a total of $15.4 million. Genworth Financial and AIG’s United Guaranty unit each paid $4.5 million. MGIC Investment Corp. paid $2.65 million, and Radian Group paid $3.75 million.
Radian Guaranty’s president, Teresa Bryce Bazemore, speaking for Radian but summing it up beautifully for the group of grabbers, issued a statement that the settlement “was an opportunity to eliminate distractions at an acceptable cost.
Are the lenders being looked at? I hope so. After all, kickbacks aren’t paid into thin air.
But it won’t matter. The worst that will happen is that they’ll settle and pay some fines. Who cares how much they pay. It will come out of profits, and be considered an “acceptable cost.” Shareholders will whimper for a second – that is, until they cheer the next announced buyback or dividend hike – and all will be forgiven.
No one will go to jail.
It doesn’t matter that kickbacks are illegal and people go to jail for such blatant scheming. We’re talking about the protected financial services class – not any other industry or some easily picked-on punters.
America’s financial services class is above the law.
People scheme to get kickbacks. People pay kickbacks and people receive kickbacks. People benefit from illegal kickbacks. People – not companies are – to blame. People are guilty.
But financial services people are anonymous. Or they’ve all been issued cloaks of invisibility from Hogwarts Congress. Their companies pick up the tab for their scheming and illegal acts. Their names are rarely mentioned, no one is ever to blame…
The company did it.
This is not the America of laws and legitimacy that I grew up with. This is oligarchic America, a country where money rules and laws are bent and bastardized, to benefit the moneyed class at the expense of honesty, integrity, and basic human principles.
Wherefore art thou, my dearly beloved America?
Best,
Shah
insurance, mortgage fraud, banks
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