The SEC has lost steam in its already very weak push against mortgage lenders and the investment banks that supplied them with money for alleged fraudulent lending. The investment banks supplied funds by allegedly defrauding investors in residential mortgage backed securities (RMBS), collateralized debt obligations (CDOs), CDO-squared (and more). The alleged securities fraud in the sale of mortgage backed securities, CDOs, and related credit derivatives, is only one part of a widespread Ponzi scheme. Mortgage lenders made multi-billion dollar settlements after allegations of fraudulent lending, while producing phony documents that disguised violations of lending standards. They could not have continued this alleged fraud without funding from investment banks. More in the Huffington Post here.
