By Karl Denninger
An indictment unsealed today in federal court in Alexandria, Virginia, alleges that Farkas, 57, and fellow conspirators sought to deceive financial firms and TARP by covering up shortfalls at his closely held mortgage lending company based in Ocala, Florida. The company filed for bankruptcy in August 2009.
Yep, and a big part of it was related to Colonial Bank, a firm that I have written about extensively, including their penchant for believing they were “well-capitalized” despite being chock-full-to-the-nuts with commercial real estate holdings in bubble areas.
If you remember, I wrote a few pieces on the TBW cease-and-desist order and a raid on a Colonial office, both in 2009. Then there was the truth that finally came out on the outrageous over-valuation of their “internal values” in the portfolio – 37% in total that was exposed when BB&T took them over in one of last year’s “forced marriages.”
While it’s nice to see some indictment paper flowing on this, I remain unimpressed that we have yet to see actual BANK EXECUTIVES in the dock, as everything that we’ve seen certainly indicates that they were complicit (at best) in what went on during this period of time. Indeed, there are even statements that in some cases (like the municipal bid-rigging scams for GICs) some banks have been offered immunity in exchange for cooperation – even though they were (by far) the biggest beneficiaries in “earning” money they weren’t entitled to and they have, so far, kept it.
On balance I’ll call this “A Good Start”, but until I see bank executives in the dock to go along with the non-bank folks who are being rounded up, color me jaded and unimpressed.