Thanks for the link fuzz.

I think his assessment of the "liars loans" and their degree of fraudent activity is a little off base though. Where he states that the loans, when examined, are near 90% fraudulent I believe he is correct. Where he is incorrect is in his assertion that the fraud was committed by the loan originator or loan broker.

There were many cases where loan originators encouraged the fraud. There should be no doubt about that. Although, in the end, it was the consumer who signed the application and swore all the statements and representations therein were truthful and correct. That would include the amount of income and assets "stated" on the application.

Moreover, the other frauds Black is referring to are the representations on the quality of the loan packages held and sold by the likes of Lehman Bros, Bear Sterns, Goldman Sachs, exc. To the end of transparency, that is why the ratings agencies exist. They have just as much blame in this story as anyone. In the case of Goldman Sachs, they are being accused of misrepresenting the quality of loan packages they created while at the same time actively betting against them using the opaque market of OTC derivatives or credit default swaps. While what they did may have technically been legal at the time (up for debate, I lean towards illegal) firms should be allowed to hedge positions by betting against investments. Those bets however, should be transparent on an open exchange so the buyer is aware of the positions of the seller.

The big fraud, when looked at through a broad lense, is the fraud that was perpetrated by the Fed by providing all the booze for the punch bowl. You won't see too many people go after that monster. That's why an audit is desparately needed.