It seems our banking regulators and agencies are becoming even more creative in order to get around having to impose the normal penalties against large banks for fraudulent behavior.
A recent case in point is HUD’s proposing to modify their individual loan certification form which is currently required by banks to obtain FHA insurance. With this modification, Chase and Citigroup wouldn’t have to acknowledge the recent fraud associated with foreign exchange manipulation, which makes them ineligible for FHA insurance.
Members of Congress Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Maxine Waters (D-CA) have noted in a letter to HUD and FHA heads that “Under the current loan certification requirements … big banks, including two major FHA lenders, JP Morgan Chase and Citigroup – would be barred from obtaining FHA insurance once their criminal plea agreements take effect.” The lawmakers also noted that with the proposed change “those banks remain eligible for FHA insurance.”
This so-called “modification” lets the banks off scot-free! They can continue to play the FHA insurance game. They committed the fraud, and if the modification goes through, there are no repercussions.