Naturally, that may seem contradictory because institutional investors, such as pension funds, have requirements to hold highly rated investments. Although, the credibility of the three major ratings agencies became corrupted and those agencies enabled this wide-scale fraud. Unfortunately, the ratings agencies have an inherent conflict of interest because the investment banks pay the ratings agencies for their service, particularly higher commissions with derivatives. Therefore, the ratings agencies were pressured to give derivatives the highest rating, AAA, otherwise the investment banks took their business to one of the other agencies. In other words, the investment banker essentially forced the ratings agencies to compete against each other in a race to the bottom. In fact, it was in some cases as simple as wining and dining the reps at the…show more content… She said, “I’m not the only whistleblower in these cases…you have these emails and these memos, but nothing happens. A fine gets paid, and then all of the facts and who did what gets washed away.” In sum, there are several others examples of people who risked their careers to expose this kind of corporate larceny all for naught as the DOJ has simply sat on the cases.
The average person doesn’t understand the complexity of the fraud involved in the financial crash. However, all of the major Wall Street firms were involved in another massive scale fraud scheme, the “robo signing” foreclosure scandal, which was a little easier to follow. Most of the paper system of publicly registered mortgages was replaced with an electronic system in the 1990s. On the surface, that seems like a logical step towards modernization, but the purpose of this electronic system was to speed up the process for bundling mortgages into various types of derivative bets and mortgage backed