Bloomberg.com has an interesting look inside a bank failure, describing the crimes which occur but never get prosecuted, unless you happen to be a small fry criminal:
If you were a banker, which of the following activities would be more likely to land you a quick trip to the federal penitentiary? Is it:
(a) Misrepresenting your dying bank’s financial condition in order to secure almost $300 million in TARP bailout cash and then quickly proceeding to lose it all, or
(b) Embezzling about $235,000 from your employer to support your compulsive-gambling addiction and pay off personal debts?
The correct answer, naturally, is “b.” In this country, when it comes to matters of high-finance crime and punishment, little pigs get slaughtered, while hogs get fat -- convicted Ponzi schemer Bernard Madoff being this rule’s most notable exception. ...
The large scale crimes are [m]ainly those related to overvalued loans and understated losses. ... where bank employees lied to ... auditors, intentionally delayed loan writedowns and altered documents to hide credit losses.
That's why we highlight "overvaluations" of reported assets when we report on Bank Failure Fridays, just to try to provide some perspective on the scope of the chicanery going on.
