To help lenders and banks in trouble, the federal government created the Troubled Asset Relief Program. Taxpayers are on the hook for much less cost that TARP was initially estimated. The SEC is taking some lenders to task for a $ 1.9 billion fraudulent bill. Lee Farkas, chairman of a mortgage lender, has been charged in federal court for defrauding the TARP program.
Resource for this article: Lee Farkas, mortgage lender, charged with TARP fraud By Personal Money Store
Taylor, Bean, and Whitaker Mortgage lenders
All investments sold by Taylor, Bean and Whitaker were overseen by Lee Farkas, who was the chairman and majority owner. Through the administration of TARP funds, TBW sold more than $ 1.5 billion in “fabricated or impaired loans” to Colonial Bank. Along with other things, Colonial Bank used these investments to get TARP money from the government. At one point, Taylor, Bean and Whitaker was the largest mortgage lender that wasn't a bank – but in August of 2009, it filed for bankruptcy.
The alleged crimes of Lee Farkas
When he was the head of the mortgage lender, Lee Farkas presumably defrauded the SEC of more than $ 1 billion. The Securities and Exchange commission alleges that Farkas sold $ 1 billion in “damaged” mortgage loans and $ 500 million in phony loans. Lee Farkas also allegedly headed up a “bogus equity investment” that helped Colonial Bank qualify for TARP funds. These actions, along with other alleged offenses, resulted in losses of a lot more than $ 1.9 billion of TARP funds.
Ramping up Fed oversight
The amount of oversight that the Fed has is being ramped up under the watch of Ben Bernanke. The Fed and Bernanke have come out in support of the financial reform bill in Congress. The oversight that both the Fed and also the SEC may have over the financial industry is also being ramped up – including increased prosecutions of those that have defrauded the funds.
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