'Greed and ego' mean 10-year sentence for disgraced banker
SEATTLE -- A crooked banker at the center of one of the state's largest lending frauds has been sentenced to 10 years in prison, the stiffest sentence handed down against a Western Washington banker caught for mortgage malfeasance.
Shawn Portmann, once one of the most productive loan officers in the country, was exposed as a fraud and liar after the housing market collapse left his former employer in tatters.
Portmann, now 40, made millions as the driving force behind Tacoma-based Pierce Commercial Bank's mortgage-lending arm. But an FBI and Internal Revenue Service investigation showed, Portmann was sentenced for leading a scheme that saw hundreds of loans issued to unqualified borrowers. Pierce Commercial Bank collapsed largely because of its mortgage lending business's failure.
Sentencing Portmann to the shortest prison term considered in a plea agreement the loan officer struck with prosecutors, U.S. District Judge Benjamin Settle noted most of those who sustained the rush of bad loans that brought down world economy - from banking leaders to government regulators to homebuyers who lied on their mortgage applications - have not been held to account.
Asserting that many involved were willing to adjust their values and ethics to make money and gain power, Settle compared the pre-mortgage crisis banking sector to a game of musical chairs.
"When (the music) stopped four or five years ago, the players found there were not nearly enough chairs to go around," the judge said in his Tacoma courtroom.
"This problem," Settle continued, "was systematic over the past decade in the U.S. banking industry."
Until the market collapse, Portmann was celebrated for building what became a key business for Pierce Commercial Bank. The bank's board of directors even gave him a standing ovation when he reported his division's gains during the height of the fraud; Pierce Commercial Bank President Gary Gahan later acknowledged the self-congratulation looks "pretty stupid" now.
For his crimes, prosecutors sought a 14-year prison sentence, the longest allowed under the plea agreement Portmann inked with the prosecution in September.
"Portmann risked the future of the bank and well-being of his staff and home buyers in order to satiate his own greed and ego," Assistant U.S. Attorneys Brian Werner and Arlen Storm said in a statement to the court.
His conduct, the federal prosecutors continued, "was emblematic of the housing bubble, that is, tell any lie necessary, get paid first, and push the problems that come with home finance on to someone else, another bank, the next borrower, or the government."
Portmann's attorneys argued their client should be sentenced to less than a decade in prison. Portmann, who has deep ties to the region, has no significant criminal history. His attorneys claim he's also become what he strived not to be - a broke man with few prospects.
"All of his financial gains have been lost, and he is penniless," defense attorneys Robert Chadwell and Krista Bush told the court. "Many of his fair-weather friends and colleagues have deserted him. He has been repeatedly vilified and ridiculed in the media."
Tuesday's sentencing highlighted a painful fall for Portmann, who came to Pierce Commercial Bank in 2004 as a rising star.
A successful residential loan officer at Puyallup's City Bank, Portmann, along with two other lending officers, launched Pierce Commercial Bank's residential lending arm, PC Bank Home Loans in 2004.
PC Bank Home Loans issued mortgages but rarely held onto the loans for long. Instead, as was common before the housing market collapse in 2007, the loans were bundled and resold to other banks.
Writing the court, Portmann's attorneys described him as a relentless worker who put in seven days a week at the bank in part out of fear that he'd return to the poverty he knew as a child.
"He was honored as one of the highest performing loan originators in the state, then the nation," Chadwell and Bush told the court. "He achieved that warm bubble of safety, respect and admiration that he longed for and he was terrified to lose it."
Portmann knew many of the unqualified loan recipients would default on their loans, which had been sold to other banks that - having forgone any independent investigation - believed they were buying loans made to well-qualified buyers.
And that's where the fraud hit home.
At least in hindsight, the banks and other investors that bought PC Bank Home Loans mortgages contend they relied on the bank to accurately vet the customers to whom it leant money. Because Portmann and others doctored loan applications so mortgages would be extended to unqualified buyers, the larger banks were buying much more risky loans.
While wide-ranging, Portmann's fraud was not particularly complex.
Facing unqualified borrowers, Portmann found easy solutions. Unemployed borrowers claimed to work at one of Portmann's companies, while underpaid borrowers saw their salaries balloon. Cashier's checks written to creditors - but never delivered - cleared up disqualifying debts. Investment properties became primary residences - banks believe people will work harder to make payments on their home than a failing rental property of vacation property.
Prosecutors believe hundreds loans Portmann closed contained fraudulent information. Portmann had help, of course. Portmann's loan processors handled the "fixed" loan applications, while his underwriter's stamp of approval cleared the loans for secondary sale. At least nine conspirators have been sentenced to brief prison terms or probation after pleading guilty to related offenses.
Portmann's former subordinates have described him as a bully bent on making money. His own attorneys admit he threatened to tear off an employee's arms and throw them out a window, though they make the obvious point that Portmann had no intention of actually disarming anyone.
Casting Portmann's conspirators as victims of their boss's greed, prosecutors noted they now "face the world as felons" banned from working in banking.
Among those convicted in the scheme was Portmann's supervisor, Peirce Commercial Bank Vice President and Residential Lending manager Sonia Lightfoot. Lightfoot was sentenced to 30 days in jail, four months on house arrest and 60 hours of community service. None of the bank's board of directors or C-level officers was implicated in the fraud.
Portmann's attorneys denied suggestions that he forced anyone into a life of crime. Several had followed Portmann to the PC Bank, and several left with him after he was fired in 2008.
While most of his conspirators were paid better than most in the industry, Portmann received the lion's share of the spoils while the fraud was ongoing.
From 2004 to his firing in 2008, Portmann closed nearly $1 billion worth of loans. As loan officer and principal for PC Bank Home Loans, Portmann got a cut of each loan's total value as well as a percentage of the fees.
During the four-year fraud, Portmann took home about $1.7 million annually. He lived well, driving a BMW SUV and captaining a 41-foot yacht while buying properties in Puyallup and Arizona.
Questioned during a sworn deposition conducted by Federal Reserve Bank investigators, Gahan, the bank's president, said Portmann had a good relationship with the bank's board of directors.
During one meeting with the board during the height of the fraud, Portmann received a standing ovation after a giving a presentation on the growth of the mortgage lending business.
"The board was very receptive to him," Gahan said, according to the transcript. "They were appreciative of the numbers he was bringing into the bank."
"When you think that things are going well and all that, it's one thing," Gahan continued. "But to know what he has done to my bank, it makes us look pretty stupid actually."
Pierce Commercial Bank fired Portmann in July 2008. At issue was not the fraud but Portmann's behavior toward another employee - several of his collaborators described him as an abusive boss who berated his subordinates, particularly women.
In July 2010, IRS investigators recovered $102,000 stored in a trash bag purportedly belonging to from Portmann. IRS and FBI investigators had contacted the holder of the bag, who said Portmann had given it to him for safekeeping.
Speaking with IRS and FBI agents in 2010, Portmann's personal assistant said she withdrew about $500,000 from Portmann's savings account and deposited the cash in a safe at his home, according to court documents.
Regulators shuttered Pierce Commercial Bank on Nov. 5, 2010. The collapse cost the federal deposit insurance fund $25 million. Pierce Commercial Bank's failure also cost taxpayers at least $6.8 million in funds loaned to Pierce Commercial Bank through the Troubled Asset Relief Program - TARP - which have not been repaid.
While the fraud was ongoing, state and federal regulators conducted four reviews of the bank's practices. At no point was the fraud detected, and Pierce Commercial Bank continued to receive high marks until its collapse.
An inspector general's report to the Board of Governors of the Federal Reserve System found management at Pierce Commercial Bank failed to watch its mortgage lending arm.
"The Board of Directors and senior management allowed the mortgage banking division - PC Bank - to operate independently without appropriate oversight and failed to conduct adequate strategic planning or implement robust internal controls," Assistant Inspector General Anthony Castaldo said in the report.
Castaldo went on to note that Federal Reserve Board evaluators missed "multiple opportunities" to uncover the trouble at Pierce Commercial Bank.
Portmann's attorneys contend blaming their client for Pierce Commercial Bank's failure is "unfairly simplistic," in part because he was lauded for his performance during much of the time the fraud was ongoing.
From the home buyers to Pierce Commercial Bank managers to the lending industry at large, everyone involved wanted Portmann and others like him to be closing loans, his attorneys told the court. Appetite for the loans, they contended, was "insatiable" as lending standards fell away.
"Lending standards declined and the traditional home ownership model of long-term investment changed to one that mirrored stock market investment, with rapid buying and selling to turn a quick profit," Bush and Chadwell told the court. "The rising home values of the period fed this fire, resulting in rampant speculation by buyers, banks, and investors, which, in turn, resulted in further price escalation.
"Everyone believed that housing prices would continue to rise long into the future and even experts were 'blindsided' by the financial crisis."
Portmann and the rest were indicted in August 2011, just hours before U.S. Attorney for Western Washington Jenny Durkan announced that no criminal charges would be filed against lenders at Washington Mutual Bank suspected of similar misdeeds. While federal regulators pursued a civil case against former WaMu CEO Kerry Killinger, Department of Justice investigators failed to produce evidence supporting suspicions that WaMu employees were illegally padding loan applications.
WaMu failed in 2008 amid a cloud of suspicion that improper lending had been occurring there. The bank filed for bankruptcy protection after the government seized its Seattle-based flagship bank and sold its assets to JPMorgan Chase for $1.9 billion in the largest bank failure in U.S. history.
Writing the court on his own behalf, Portmann apologized for his fraud and the way he treated those who worked with him.
"I understand that my acts were not victimless," Portmann said in a letter to the court. "I have hurt people and their families. I was arrogant and angry and I misused my position at the bank. …
"The people I have worked with are all good people. I have nothing bad to say about any of them. I can only take responsibility for myself and try to learn from my failure of character, morality and judgment."
Leaders in the investigating agencies described Portmann's conviction and now prison sentence as a warning to others who would consider such thefts.
Durkan noted that Portmann's scheme hurt property values of those who lived near those who couldn't pay the mortgages they and Portmann lied to get. It also cost taxpayers dearly.
"Shawn Portmann's greed destroyed dreams, ruined careers and defrauded millions from taxpayers," the U.S. Attorney said in a statement. "He now will face the consequences of the damage he did to so many.
"The depth of his fraud helped bring down a bank, and haunted innocent homeowners whose communities were degraded with vacant, foreclosed homes and a precipitous decline in property values."
Sentencing Portmann, Settle noted that Portmann's crimes were about more than greed.
Portmann, the judge said, was pursuing the American dream - money, sure, but also the recognition and power that can come with succeeding professionally. Settle agreed that Portmann likely wasn't an evil man, but one that traded away his integrity when it became convenient.
"The dream for you, and too many others, became a nightmare," Settle told Portmann.
Free on bond, Portmann was taken into custody following Monday's hearing. He is expected to be tranfered to a Bureau of Prisons facility, where he will serve his sentence.
Shawn Portmann, once one of the most productive loan officers in the country, was exposed as a fraud and liar after the housing market collapse left his former employer in tatters.
Portmann, now 40, made millions as the driving force behind Tacoma-based Pierce Commercial Bank's mortgage-lending arm. But an FBI and Internal Revenue Service investigation showed, Portmann was sentenced for leading a scheme that saw hundreds of loans issued to unqualified borrowers. Pierce Commercial Bank collapsed largely because of its mortgage lending business's failure.
Sentencing Portmann to the shortest prison term considered in a plea agreement the loan officer struck with prosecutors, U.S. District Judge Benjamin Settle noted most of those who sustained the rush of bad loans that brought down world economy - from banking leaders to government regulators to homebuyers who lied on their mortgage applications - have not been held to account.
Asserting that many involved were willing to adjust their values and ethics to make money and gain power, Settle compared the pre-mortgage crisis banking sector to a game of musical chairs.
"When (the music) stopped four or five years ago, the players found there were not nearly enough chairs to go around," the judge said in his Tacoma courtroom.
"This problem," Settle continued, "was systematic over the past decade in the U.S. banking industry."
Until the market collapse, Portmann was celebrated for building what became a key business for Pierce Commercial Bank. The bank's board of directors even gave him a standing ovation when he reported his division's gains during the height of the fraud; Pierce Commercial Bank President Gary Gahan later acknowledged the self-congratulation looks "pretty stupid" now.
For his crimes, prosecutors sought a 14-year prison sentence, the longest allowed under the plea agreement Portmann inked with the prosecution in September.
"Portmann risked the future of the bank and well-being of his staff and home buyers in order to satiate his own greed and ego," Assistant U.S. Attorneys Brian Werner and Arlen Storm said in a statement to the court.
His conduct, the federal prosecutors continued, "was emblematic of the housing bubble, that is, tell any lie necessary, get paid first, and push the problems that come with home finance on to someone else, another bank, the next borrower, or the government."
Portmann's attorneys argued their client should be sentenced to less than a decade in prison. Portmann, who has deep ties to the region, has no significant criminal history. His attorneys claim he's also become what he strived not to be - a broke man with few prospects.
"All of his financial gains have been lost, and he is penniless," defense attorneys Robert Chadwell and Krista Bush told the court. "Many of his fair-weather friends and colleagues have deserted him. He has been repeatedly vilified and ridiculed in the media."
Tuesday's sentencing highlighted a painful fall for Portmann, who came to Pierce Commercial Bank in 2004 as a rising star.
A successful residential loan officer at Puyallup's City Bank, Portmann, along with two other lending officers, launched Pierce Commercial Bank's residential lending arm, PC Bank Home Loans in 2004.
PC Bank Home Loans issued mortgages but rarely held onto the loans for long. Instead, as was common before the housing market collapse in 2007, the loans were bundled and resold to other banks.
Writing the court, Portmann's attorneys described him as a relentless worker who put in seven days a week at the bank in part out of fear that he'd return to the poverty he knew as a child.
"He was honored as one of the highest performing loan originators in the state, then the nation," Chadwell and Bush told the court. "He achieved that warm bubble of safety, respect and admiration that he longed for and he was terrified to lose it."
Portmann knew many of the unqualified loan recipients would default on their loans, which had been sold to other banks that - having forgone any independent investigation - believed they were buying loans made to well-qualified buyers.
And that's where the fraud hit home.
At least in hindsight, the banks and other investors that bought PC Bank Home Loans mortgages contend they relied on the bank to accurately vet the customers to whom it leant money. Because Portmann and others doctored loan applications so mortgages would be extended to unqualified buyers, the larger banks were buying much more risky loans.
While wide-ranging, Portmann's fraud was not particularly complex.
Facing unqualified borrowers, Portmann found easy solutions. Unemployed borrowers claimed to work at one of Portmann's companies, while underpaid borrowers saw their salaries balloon. Cashier's checks written to creditors - but never delivered - cleared up disqualifying debts. Investment properties became primary residences - banks believe people will work harder to make payments on their home than a failing rental property of vacation property.
Prosecutors believe hundreds loans Portmann closed contained fraudulent information. Portmann had help, of course. Portmann's loan processors handled the "fixed" loan applications, while his underwriter's stamp of approval cleared the loans for secondary sale. At least nine conspirators have been sentenced to brief prison terms or probation after pleading guilty to related offenses.
Portmann's former subordinates have described him as a bully bent on making money. His own attorneys admit he threatened to tear off an employee's arms and throw them out a window, though they make the obvious point that Portmann had no intention of actually disarming anyone.
Casting Portmann's conspirators as victims of their boss's greed, prosecutors noted they now "face the world as felons" banned from working in banking.
Among those convicted in the scheme was Portmann's supervisor, Peirce Commercial Bank Vice President and Residential Lending manager Sonia Lightfoot. Lightfoot was sentenced to 30 days in jail, four months on house arrest and 60 hours of community service. None of the bank's board of directors or C-level officers was implicated in the fraud.
Portmann's attorneys denied suggestions that he forced anyone into a life of crime. Several had followed Portmann to the PC Bank, and several left with him after he was fired in 2008.
While most of his conspirators were paid better than most in the industry, Portmann received the lion's share of the spoils while the fraud was ongoing.
From 2004 to his firing in 2008, Portmann closed nearly $1 billion worth of loans. As loan officer and principal for PC Bank Home Loans, Portmann got a cut of each loan's total value as well as a percentage of the fees.
During the four-year fraud, Portmann took home about $1.7 million annually. He lived well, driving a BMW SUV and captaining a 41-foot yacht while buying properties in Puyallup and Arizona.
Questioned during a sworn deposition conducted by Federal Reserve Bank investigators, Gahan, the bank's president, said Portmann had a good relationship with the bank's board of directors.
During one meeting with the board during the height of the fraud, Portmann received a standing ovation after a giving a presentation on the growth of the mortgage lending business.
"The board was very receptive to him," Gahan said, according to the transcript. "They were appreciative of the numbers he was bringing into the bank."
"When you think that things are going well and all that, it's one thing," Gahan continued. "But to know what he has done to my bank, it makes us look pretty stupid actually."
Pierce Commercial Bank fired Portmann in July 2008. At issue was not the fraud but Portmann's behavior toward another employee - several of his collaborators described him as an abusive boss who berated his subordinates, particularly women.
In July 2010, IRS investigators recovered $102,000 stored in a trash bag purportedly belonging to from Portmann. IRS and FBI investigators had contacted the holder of the bag, who said Portmann had given it to him for safekeeping.
Speaking with IRS and FBI agents in 2010, Portmann's personal assistant said she withdrew about $500,000 from Portmann's savings account and deposited the cash in a safe at his home, according to court documents.
Regulators shuttered Pierce Commercial Bank on Nov. 5, 2010. The collapse cost the federal deposit insurance fund $25 million. Pierce Commercial Bank's failure also cost taxpayers at least $6.8 million in funds loaned to Pierce Commercial Bank through the Troubled Asset Relief Program - TARP - which have not been repaid.
While the fraud was ongoing, state and federal regulators conducted four reviews of the bank's practices. At no point was the fraud detected, and Pierce Commercial Bank continued to receive high marks until its collapse.
An inspector general's report to the Board of Governors of the Federal Reserve System found management at Pierce Commercial Bank failed to watch its mortgage lending arm.
"The Board of Directors and senior management allowed the mortgage banking division - PC Bank - to operate independently without appropriate oversight and failed to conduct adequate strategic planning or implement robust internal controls," Assistant Inspector General Anthony Castaldo said in the report.
Castaldo went on to note that Federal Reserve Board evaluators missed "multiple opportunities" to uncover the trouble at Pierce Commercial Bank.
Portmann's attorneys contend blaming their client for Pierce Commercial Bank's failure is "unfairly simplistic," in part because he was lauded for his performance during much of the time the fraud was ongoing.
From the home buyers to Pierce Commercial Bank managers to the lending industry at large, everyone involved wanted Portmann and others like him to be closing loans, his attorneys told the court. Appetite for the loans, they contended, was "insatiable" as lending standards fell away.
"Lending standards declined and the traditional home ownership model of long-term investment changed to one that mirrored stock market investment, with rapid buying and selling to turn a quick profit," Bush and Chadwell told the court. "The rising home values of the period fed this fire, resulting in rampant speculation by buyers, banks, and investors, which, in turn, resulted in further price escalation.
"Everyone believed that housing prices would continue to rise long into the future and even experts were 'blindsided' by the financial crisis."
Portmann and the rest were indicted in August 2011, just hours before U.S. Attorney for Western Washington Jenny Durkan announced that no criminal charges would be filed against lenders at Washington Mutual Bank suspected of similar misdeeds. While federal regulators pursued a civil case against former WaMu CEO Kerry Killinger, Department of Justice investigators failed to produce evidence supporting suspicions that WaMu employees were illegally padding loan applications.
WaMu failed in 2008 amid a cloud of suspicion that improper lending had been occurring there. The bank filed for bankruptcy protection after the government seized its Seattle-based flagship bank and sold its assets to JPMorgan Chase for $1.9 billion in the largest bank failure in U.S. history.
Writing the court on his own behalf, Portmann apologized for his fraud and the way he treated those who worked with him.
"I understand that my acts were not victimless," Portmann said in a letter to the court. "I have hurt people and their families. I was arrogant and angry and I misused my position at the bank. …
"The people I have worked with are all good people. I have nothing bad to say about any of them. I can only take responsibility for myself and try to learn from my failure of character, morality and judgment."
Leaders in the investigating agencies described Portmann's conviction and now prison sentence as a warning to others who would consider such thefts.
Durkan noted that Portmann's scheme hurt property values of those who lived near those who couldn't pay the mortgages they and Portmann lied to get. It also cost taxpayers dearly.
"Shawn Portmann's greed destroyed dreams, ruined careers and defrauded millions from taxpayers," the U.S. Attorney said in a statement. "He now will face the consequences of the damage he did to so many.
"The depth of his fraud helped bring down a bank, and haunted innocent homeowners whose communities were degraded with vacant, foreclosed homes and a precipitous decline in property values."
Sentencing Portmann, Settle noted that Portmann's crimes were about more than greed.
Portmann, the judge said, was pursuing the American dream - money, sure, but also the recognition and power that can come with succeeding professionally. Settle agreed that Portmann likely wasn't an evil man, but one that traded away his integrity when it became convenient.
"The dream for you, and too many others, became a nightmare," Settle told Portmann.
Free on bond, Portmann was taken into custody following Monday's hearing. He is expected to be tranfered to a Bureau of Prisons facility, where he will serve his sentence.
Broke the law... they knew it and got caught.. if you ask me he got off TOO EASY... I wish I could walk away from my commitments but I believe I signed for my mortgage and I am indebted to PAY it! - These people who are walking away because they cannot hack it that are tanking values because stupidity like this persons was allowed to flourish... the laws always protect those who cannot handle something while those of us making our payments get stuck holding the bag... what a darn JOKE!Â
 His attorneys claim he's also become what he strived not to be - a broke man with few prospects."All of his financial gains have been lost, and he is penniless," defense attorneys Robert Chadwell and Krista Bush told the court. "Many of his fair-weather friends and colleagues have deserted him. He has been repeatedly vilified and ridiculed in the media."
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Good !!! He deserves to lose everything and have nothing and should have gotten 15-20 years instead of the 10 years he got. I don't feel bad for this guy in any way, shape, or form. SCUMBAG, plain and simple!
Finally - Vindication! As a real estate agent, I had 3 buyers who went to Shawn against my recommendations - all have since lost their homes. When I figured out what he was doing, I filed a complaint with the lending authorities, who in turn sent my complaint to Shawn's superior at Pierce Commercial, who played this unbelievable game of "Shawn is our best loan officer, he wouldn't do that". then a few days later I get a call from Shawn himself. voice low and threatening, saying "do you know who I am? Do you know who I AM? I know "people" and I know where you live! I'll get you"....I was shocked and ticked off, so I called the lending authorities again...Shawn was fired about 4 months later for sexual harassment, at least that was what the inner circle said. I am so glad this mean, evil man will be behind bars!
Komo should have put up a picture of this king of scumbags , but they didnt, may he rot in prison for ten years (not long enough in my opinion) .  Bankers who wrong people for any reason are the scum of the earth you can see his picture here: http://blog.thenewstribune.com/crime/2013/01/28/former-vp-at-pierce-commercial-bank-sentenced-to-federal-prison-in-bad-loan-case/
This guy is a pile of scum, no doubt.......BUT......I still don't understand how homebuyers could figure they could afford a mortgage on a half million dollar home if they only made $40k a year (just using a made up example). We need to use our head too and be comfortable and accept living within our means. Who cares if your friend has a mcmansion and you don't? I guarantee the person who lives in a modest house will be far better off in the long run.
 @hunkydorey247 They DO bear some responsibility, because it was their decision that made them ask for the loan. They usually thought they could flip it in a year or two, because the bankers and Wall St lied to them (or deluded themselves and believe it themselves) in saying that prices would keep going up for a long time. Not all home buyers were sharp enough to know this, and they got greedy. But it's part of a bankers *JOB* to know this history of things like this, and make *prudent* decisions. They didn't.
@RN1 Yes......I totally agree with you here. I guess my post made it sound like I was blaming the homebuyer.....which was certainly not my intention. I apologize.
Greed & Ego... could be applied to 99% of corpses w/ a pulse on Wall St. Yet, when you are monitored and regulated by one of your own, you can get away with just about anything. This guy is low hanging fruit. As soon as I see Killinger or any of his cronies do time, I will begin to think there is some sort of oversight. This guy is only scratching the surface of these narcissistic criminals.
They went after the easier target rather than the really big fish in the housing debacle.
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Guys like him ruined 100s to hundreds of thousands of lives, and made our entire financial system weak and fragile, and he only gets 10 years? He SHOULD be getting life, along with a few thousand of his banking buddies, in general population.
 @RN1 Correct. As should many people on Wall Street who have never been prosecuted. And yet, if you and I don't pay our mortgages on time, there'll be hell to pay.
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The thing that I find shocking are number of idiots still backing deregulation of that same industry.
 @SusieQ  @RN1 Yup. Deregulation is when it all started. If you don't watch them they will do whatever they want, without consequence.Â
 @Seahawker  @SusieQ Nope. NOT deregulation. CRA. Community Reinvestment Act (Carter) got the ball rolling. It "encouraged" (i.e. made open to lawsuits any bank that didn't do "enough" in the eyes of some shakedown race hustler) banks to make loans for political and social engineering reasons to people who were not a financially sound bet. In exchange, the banks got a pass on some of their more "leveraged" dealings, and got in bed with politicians. Follow some tweaks by later administrations, all well-intended of course, and you end up with the real-estate bubble and the mortgage-backed securities debacle.
It wasn't DE-regulation, it was OVER-regulation, and serial bailouts to save politicians as much as the banks, that removed the consequences. They thus removed the downside risks (socializing losses) and privatized profits, until the whole thing blew up. Well, IS BLOWING UP, now. It'll take a while longer before it's done. I figure another four or maybe five years.
 @SusieQ It's a combination of too much regulation and too much "revolving door job placements" where people are into and out of various industry jobs and the government jobs over-seeing their own field (because they are the only ones who "understand" it). So, they all trade favors and wink-nudge, because they "meant well.".
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If a bank or other company is so big it's "too big to fail" and needs a bail-out, it should be taken over and management gets civil servant pay-scale with no bonuses, because THEY made it risk the whole system. That keeps things small, separate, and we can just let the normal business failures happen, and liquidate the companies when they are badly run. Now they are HUGE and badly run, and we can't easily or simply shut them down, and we can't afford to let them keep operating.
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De-regulation isn't the problem - it's making people that have the decision-making authority NOT have any skin in the game for bad results. Make failure PAINFUL, rather than a stepping stone to another higher-paying job, and we'll get less of it.
he is not the only one
He dropped over half a million at the EQC but when he was arrested everyone was happy becouse he was a nasty SOB