William K. Black is a white-collar criminologist and former financial regulator with much research on what causes financial markets to become profoundly dysfunctional.
The FBI has been warning of an “epidemic” of mortgage fraud since September 2004.
It also reports that lenders initiated 80% of these frauds.
When the person that controls a seemingly legitimate business or government agency uses it as a “weapon” to defraud we categorize it as a “control fraud” and the “weapon of choice” is accounting.
Control fraud causes greater financial loss than all other forms of property crime.
Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a “criminogenic environment”.
“The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.”
The Two Documents Everyone Should Read to Better Understand the Crisis