Deutsche Bank-United States SEC revolving door

This Associated Press video says about itself:

Federal government sues Deutsche Bank over alleged mortgage fraud

Frankfurt, Germany – 12 September, 2008

++4:3++
1. Pan of Deutsche Bank headquarters
2. Wide of Deutsche Bank headquarters
FILE: date and location unknown
++4:3++
3. Various of homes for sale and signs

New York City – 3 May, 2011
++16:9++
4. Mid of Preet Bharara, United States Attorney for the Southern District of New York at podium
5. SOUNDBITE (English) Preet Bharara, United States Attorney for the Southern District of New York:
“This lawsuit sends them and other lenders the message that they cannot get away with lies and recklessness. They cannot casually assign the prospect of being caught to the cost of doing business.”
6. Cutaway of reporters
7. SOUNDBITE (English) Preet Bharara, United States Attorney for the Southern District of New York:
“They often seem to treat red flags as if they were green lights. Ultimately, prudence was trumped by profit, and good faith took a backseat to good fees, and today, we hope, that calculus changes.”
8. Mid of Bharara
9. SOUNDBITE (English) Preet Bharara, United States Attorney for the Southern District of New York:
“In short, this reckless behaviour, the failure to implement the lending standards required by the FHA (Federal Housing Administration) programme led the government to foot the bill for many, many mortgages that were doomed to fail, mortgages that were really ticking time bombs.”
10. Wide of Bharara

STORYLINE:

The US federal government on Tuesday started proceedings to sue Deutsche Bank, saying the bank committed fraud and padded its pockets with undeserved income as it repeatedly lied so it could benefit from a government programme that insured mortgages.

The lawsuit in the US District Court in Manhattan, New York, seeks to recover hundreds of millions of dollars in insurance claims that the government had to pay when homeowners defaulted on their mortgages.

The lawsuit also asked for punitive damages. The government said the bank made substantial profits between 2007 and 2009 from the resale of the risky mortgages, leaving the government to foot the bill for loans that defaulted.

The mortgage insurance is issued by the Federal Housing Administration.

The lawsuit said the bank carried out the fraud through its subsidiary, MortgageIT, which employed more than 2,000 people at branches in all U.S. 50 states. Deutsche acquired MortgageIT in 2007.

At a news conference, U.S. Attorney Preet Bharara said the bank engaged in a pattern of reckless lending practices for mortgages “that were really ticking time bombs,” sometimes failing even to verify that a mortgage applicant had a job.

“In fact, they often seemed to treat red flags as if they were green lights,” he said.

Still, the prosecutor said the government found no evidence of the criminal intent necessary to take the case beyond a civil lawsuit.

Since last autumn, federal regulators and attorneys general of all 50 US states have been investigating lenders accused of cutting corners and using flawed documents to foreclose on many homeowners.

In some cases, employees of financial institutions engaged in so-called robo-signing – approving documents in foreclosures without actually reading them.

Foreclosure-fraud class-action lawsuits are also piling up against major banks nationwide.

Translated from Dutch NOS TV:

Deutsche Bank whistleblower protests, refusing to accept reward

Today, 11:38

A whistleblower at Deutsche Bank has refused to accept a reward of more than seven million euros from the US stock market watchdog SEC. They wanted to thank him thus for information on fraud at Germany’s largest bank.

Former risk manager Eric Ben-Artzi rejects the reward because the SEC in his opinion does too little to punish the top executives of the bank. Who had manipulated the accounts during the financial crisis. Ben-Artzi had warned the financial authorities about that. In May last year Deutsche Bank was fined 55 million dollars by the stock market watchdog.

The whistleblower believes that the shareholders of Deutsche Bank now have to pay the fine, while the guilty people remain unaffected. According to him, this is mainly possible because at the US stock market watchdog many former directors of Deutsche Bank work.

A Deutsche Bank whistleblower turned down his share of a $16.5 million Security and Exchange Commission (SEC) award last Thursday in protest of the SEC’s refusal to target Deutsche Bank executives for fraudulent accounting practices: here.

INSIDE DEUTSCHE BANK’S $10 BILLION SCANDAL The New Yorker takes a look at how “a scheme to help Russians secretly funnel money offshore unravelled.” [The New Yorker]