The Mortgage Loan 419

.. and Gold for Toilets

In reality, the sub-prime mortgage lending crisis can be described as a clever 419 scheme engineered by mortgage lenders, brokers and highwaymen, which would not have been possible without support from major wall street banks. The losses run into billion of dollars. Northern Rock in the UK and Bear Stearns in the USA collapsed and needed emergency assistance from government through the central banks. The crisis also affected banks in Indian banks which had invested in the USA. ICICI, India's second largest bank, has reported mark-to-market loss of $263 million in its loans and investment exposures. Other Asian central banks which invested in mortgage securities have lost money in the hundreds of millions of dollars

Loans were made to people who clearly could not pay based on their income but under the expectation of the property increasing in value and the opportunity to refinance the loan. Possible income or stated income became what was placed on applications instead of actual income. People could write whatever they liked on application forms without any checking and were even encouraged by some unscrupulous loan officers or lenders to do so. The loans were then packaged as Mortgage securities and sold to large Wall Street firms as investments. If your Pension Fund or 401K happened to invest in any of these mortgage securities, wa bor loss big time.

This is the real 419. Not some silly email purported to come from West Africa claiming someone has embezzled some money, or inflated a contract or inherited gold and is looking for a bank account to transfer the money to. In exchange, the email promises you half of the money. Fools gold! I am surprised the caliber of people who fall for this scam. On NBC’s dateline, it included a Cardiologist. There are three main reasons why these scams succeed.

1) The greed of the “victim”. If someone has stolen some money and you send him or her money as an advance to help him dispose of the loot, what are you? Not just greedy but a petty criminal yourself. Yet, these people are portrayed on the press as victims of West African scammers, when they should actually be arrested and prosecuted for conspiracy to commit fraud against an African country
2) The greed of the “victim”
3) The greed and stupidity of the victim

Here is a good rule to follow; if you cannot place a country on a map of the world, don’t go investing there! The victims do not realize that their preconceived ideas about Africa as a land of corruption and Africans as an ignorant lot actually enable the scam to work on them. On receiving such an email, here is how I think their thought processes work. “Yeah, guess what! Here is someone from the Dark Continent who has stolen a lot of money and I can exploit him and take it away from him because he is probably dumb anyway” Then when the dumb man bites them for a couple of hundreds or a few thousands, they immediately scream, I am a victim. Victim of what?

Victim of conspiracy to steal the little money small countries in West Africa have in collusion with a criminal citizen of that country. But don’t hold your breath; these victims will never be prosecuted. No wonder a lot of this 419 crime is alleged to be unreported. They are too embarrassed to admit they have been hoodwinked in this way. Let us wait and see what eventually comes out of the Mortgage credit 419 schemes like you read about here . You can get a detailed history of the evolution of the credit crisis here.

In the meantime spare a thought for the people of the Asutifi District in Ghana who are being seriiously 419ed by Newmont in collusion with our Chamber of Mines. They take our gold and they build us toilets. Sane po! If we had been diligent in our development we would have built such basic amenities by now 50 years after independence. We have to hand over our gold at 1000 dollars an ounce and be grateful for toilets in returb. If that ain’t 419, tell me what is. - gbetor@kpetoe