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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, August 4, 2013

Goldman Sachs was a Lender in the Great Subprime Meltdown

William K. Black writes wonderfully concise and eminently readable articles on all aspects of the financial crisis of 2008.  In the article excerpted below, he tackles the crisis from the point of view of appraisers who were pressured by lenders (read:  "Goldman Sachs") to artificially create higher prices on properties that homeowners sought to own.

The appraisers played a crucial role in the financial crisis--both in bringing attention to the fraudulent requests from lenders and also in becoming captured by the fraud perpetrated by the lenders.  (The comments about the article are worth reading also.)
Two Sentences that Explain the Crisis and How Easy it Was to Avoid
By William K. Black - New Economic Perspectives

Everyone should read and understand the implications of these two sentences from the 2011 report of the Financial Crisis Inquiry Commission (FCIC).

“From 2000 to 2007, [appraisers] ultimately delivered to Washington officials a petition; signed by 11,000 appraisers…it charged that lenders were pressuring appraisers to place artificially high prices on properties. According to the petition, lenders were ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets” (FCIC 2011: 18).

Those two sentences tell us more about the crisis’ cause, and how easy it was to prevent, than all the books published about the crisis – combined.  Here are ten key implications.

Please read the rest of the article here 


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