Federal Reserve Excuses More Bankster Fraud
In the Matter of PEOPLES BANK, Lawrence, Kansas
The Federal Reserve Board issued a Consent Order with Peoples Bank of Lawrence, Kansas, for “deceptive residential mortgage origination practices” in violation of section 5 of the Federal Trade Commission Act. According to the press release issued by the Federal Reserve Board, Peoples Bank told certain borrowers that they were paying an additional amount for discount points that would lower the borrowers’ interest rates.
“Borrowers regularly paid thousands of dollars for Discount Points”, but in fact many of them did not receive a reduced rate. In other words, employees of Peoples Bank lied to borrowers to get them to sign on the line. However, no one at Peoples Bank appears to personally be facing any criminal liability. The Consent Order only requires that Peoples Bank pay approximately $2.8 million in total restitution, in addition to refunding all payments for discount points that did not reduce borrowers’ interest rates. Oh, and Peoples Bank had to promise not to do it again.
No Criminal Liability = No Deterrence
What Peoples Bank personnel did in this case is known as “fraud”. If the tables were turned and one of those borrowers lied about a material fact in their loan application, make no mistake that the American criminal justice system would come bearing down them like a ton of bricks and they would face the very real prospect of a ruined life and years of “pound-me-in-the-ass” prison.
No lessons have apparently been learned from the 2008 global financial crisis, which was prompted by just this sort of bankster fraud. As we’ve seen with bank after bank, none of the people responsible face any personal repercussions and the banks get off with a slap on the wrist. If the only risk is that the bank, not the people responsible, has to pay a relatively small fine and/or restitution, what type of behavior do you think a cost-benefit analysis is going to favor?
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Resource Links:
- Federal Reserve Board press release on Peoples Bank Consent Order
- Consent Order Agreement between Federal Reserve Board and Peoples Bank
- JPMorgan agrees $13 billion settlement with U.S. over bad mortgages
- Why the Goldman Sachs Settlement Is a $5 Billion Sham
- Image credit – United States government work (“Close up of the Marriner S. Eccles building”) at Flickr
