Posts filed under “Legal”
The original clip came to me from a Fox producer — and since that was the only coverage online, it was all I saw (there was no mention of other footage).
Liz tells me that Fox did several follow ups that day, including a long segment with Ladenberg Thallman banking analyst Dick Bove, (former) SEC prosecutor Marvin Pickholtz (who shot down many of the book’s accusations) as well as former Bear Stearns Chief Economist John Ryding. The book accuses Treasury Chief Hank Paulson of having a grudge against Bear — but the Treasury Department had not seen the manuscript for Bear Trap, they would not comment — but Liz tells me they were asked.
None of that was online, which is unfortunate, because this looks to be a much more substantive piece of journalism than the single clip I received.
As to my accusations of Yellow Journalism — in light of the additional clips, perhaps that was the wrong term. The two issues I have with this story are: 1) I find the entire "anonymous author to be unveiled September" by publisher BrickTower Press to be just so much gimmickry to sell books. That’s too bad, because it cheapens what could be an important inside look into Bear’s collapse; 2) As noted previously, I hate the rumor mongering aspect; given how poorly managed Bear was, its simply a nonsensical distraction, pushed by a clueless SEC, who should know better. Additionally, whenever I see that storyline on Fox, it looks to this tv junkie to be less about the actual financial issues and more about taking a cheap swipe at CNBC. But to be fair and balanced, perhaps the phrase "Yellow Journalism" was less than ideal.
I spoke with Liz this morning about my reservations about the piece. In fairness to her, my critique was based on that single clip, and I didn’t see all of the rest — as it was not online. Based on what she told me, they made a good faith effort to present many sides of this (Bove, Pickholtz, Ryding) and not just the breathless "We have a scoop" portion I saw.
Liz, tell your producer to put the good stuff on the web, and we will give it prominent play here.
Long time readers are familiar with my fascination with antique sports cars. One of my pals, Jan, is a well known Porsche collector who is also affiliated with the International Automotive Appraisers Association (IAAA). Its a hobby for him, and he specializes in the rehabilitation and appraisal of antique sports cars. He has rebuilt and appraised everything from celebrity Bugattis to classic Ferraris to modern supercars.
I call Jan "landed gentry" — he’s owned a major car rental firm (sold it), develops real estate, buys/sells land and houses. He is quasi-retired, leaving him plenty of time to play with his many fine automobiles — and for us to discuss the housing market collapse.
Amongst our many discussions, we have gone over the issue of housing appraisal fraud. So when the IAAA newsletter sent out the tale (below) to its members as a warning against fraud, conflict of interest, and corruption, it got his attention — and he forwarded it to me. His comments were: "This is even worse than the nightmare of corruption you described."
Let me hasten to add that many appraisers were offended by the corruption of colleagues in their industry, especially those greased by the worst elements among mortgage brokers and real estate agents. In 2005, more than 8,000 appraisers — roughly 10 percent of the industry — signed a petition asking the federal government to take action; the White House and Federal agencies demurred, and appraisal fraud continued unabated. Eventually, Phony and Fraudy cut a deal with NYS AG Cuomo to stop enabling the appraisal fraud.
Which brings us to the now defunct Indy Mac, and the below diatribe about the criminality, corruption, and rampant appraisal fraud that was the CountryWide spinoff’s stock in trade.
Martin was the chief commercial appraiser for Indy Mac from October 15, 2001, to when he was terminated six months later for failing to look the other way or actively engage in fraud. Most of the details below are culled from the public record of his wrongful termination litigation, which was eventually settled in Martin’s favor.
My quick overview of the conflicts, fraud, and criminality at Indy Mac —
• Underwriting loans based on appraised values well above purchase prices;
• Fabricating rent rolls for commercial properties to be appraised;
• Over-stating Construction work as 80% complete versus 15% in actuality;
• Attempting to change discounted cash flow models for subdivisions in order to increase appraised value;
• Attempted intimidation of Appraisers;
• Providing false information to appraisers;
Conflict of interests:
• Appraising a development where the land was being purchasing from David Loeb, IndyMac’s Chairman of the Board;
• On one transaction, the CEO’s father and father-in-law were
commercial construction inspectors for the firm; the loan officer was
the CEO’s brother (a former police officer with no loan experience);
That’s just the overview.
Amazingly, these events took place before the enormous Housing and Construction boom from 2003-06. One is left to imagine just how insane the place must have been during that period. I’d love to find the details, and given the enormous lending losses — $8B and counting — we can only begin to imagine what sort of rampant fraud took place. I hope the FDIC releases a full report of their investigation of the collapse of Indy Mac. (Gee, I wonder how Senator Schumer caused THOSE problems back in 2001? CNBC should know better than to publish trash such as this.)
You really need to read the entire piece to get a feel as to just how much of a criminal enterprise Indy Mac was before it went under.Is it any surprise the entire firm, and not just any individuals, are under FBI investigation for Fraud?
These things have a tendency to disappear, so I am capturing a PDF and the text (after the jump) in case it somehow vanishes.
Idiots Fiddle While Rome Burns (July 2008)
My experience at IndyMac
Vernon Martin, Certified General Appraiser
Appraiser’s Forum, 07-14-2008, 12:41 AM
Appraisal fraud: your home at risk
Appraisers say they’re being pressured by lenders to inflate their estimates of home values
CNN/Money June 2, 2005: 9:56 AM EDT
Fannie Mae, Freddie Mac agree to new appraisal standards
L.A. Times, March 04, 2008
My experience at IndyMac- General Real Estate, Mortgage, and Economic Discussions – Appraisers Forum PDF Download my_experience_at_indymac.pdf
IndyMac fraud probe launched; FBI looking into firm, not individuals
Lara Jakes Jordan, The Associated Press 07/16/2008 09:08:13 PM PDT