Recall that the profitability of S&L’s was low and made the industry a slow growth sector that found it difficult to attract new capital and management. The Canadian banking industry had the same rap.
The only way to juice earnings in the financial industry or in any industry with a mature business model is by fraud. That means using confidence to support the finance of lousy investments until the confidence evaporates. If you are the first to play and deftly pass the train wreck of to the most greedy of you successors, you can walk away very rich.
This economist is right. It was fraud and what is more, they all knew it was a pending disaster. The only ones who could be excused would be the salesmen who trusted their bosses and partners. You do not manufacture a package of crap mortgages and then get it ranked AAA and not know that you are constructing a fraud and that everyone is going wink - wink as this is peddled of to the hedge funds desperate for returns.
It is fitting that these fools were forced to pack so much in inventory, but that is likely a result of the last desperate moves to retain confidence. The players are all dead and all their competitors are very much in business since the clique could hardly let them play since they would have asked all the right questions.
As I have previously posted, all participants should be put on notice of a full investigation and asked to turn in their passports. And the crime is also treason because these greedy men put their interests ahead of their institutions and thir country's interest.
Economist: US collapse driven by 'fraud,' Geithner covering up bank insolvency
In an explosive interview on PBS' Bill Moyers Journal, William K. Black, a professor of economics and law with the University of Missouri, alleged that American banks and credit agencies conspired to create a system in which so-called "liars loans" could receive AAA ratings and zero oversight, amounting to a massive "fraud" at the epicenter of US finance.