Lesson 10: Crime and (no) Punishment on Wall Street
October 29, 2025
Review:
- Housing Market Collapse and Foreclosure Tsunami
- Crisis Players Video Presentations
Presentation:
- Mortgage Crisis Fraud
- Wall Street Banks selling MBS and CDO securities
- Subprime Loan Originators pushing ARMs and other non-traditional loans on low-income borrowers
- Countrywide Financial
- Rating Agencies issuing AAA ratings on low quality MBS and CDOs
- Moody’s
- Standard and Poor’s
- Fannie and Freddie
- Purchasing subprime loans in the secondary market
- Providing liquidity for ongoing subprime lending
- Subprime Loan Originators pushing ARMs and other non-traditional loans on low-income borrowers
- Why was no one punished?
- Obama Administration DoJ did not aggressively pursue
- Excessive greed everywhere but difficult to prove criminal fraud
- No consequences = incentive to repeat
- Too big to fail & Too rich to jail
- The Revolving Door between Wall Street and the Federal Government (1987-present)
- Alan Greenspan
- Robert E. Rubin
- Larry Summers
- Hank Paulson
- Ben Bernanke
- Timothy Geithner
- Jack Lew
- Steven Mnuchin
- Jared Kushner
- Eric Cantor and many others who moved to Wall Street/K Street immediately after serving in Congress.
- Contrast with the prior generation when integrity mattered (pre-1987)
- Marriner Eccles
- William Martin
- Arthur Burns
- Paul Volcker
- Inflection Point – the 1980s
- Reaganomics – “Government is the problem.” (deregulation)
- Wall Street – “Greed is good” (self interest over civic duty)
- Finance has grown from 4.9% of GDP in 1980 ($140 Billion) to 7.3% in 2024 ($2 Trillion). That’s 14x growth!
- Meanwhile Manufacturing fell from 20% to 11% and Construction fell from 5% to 4%.
- Our core economic engine transitioned from production to asset inflation.
Assignment:
- Watch The Untouchables
