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$625m Fine For Auditor In A Cascade Of Colossal Failures

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Renee Healion

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Taylor Bean and Whitaker Somehow the audits looked good
Farkas, back in the news
https://www.housingwire.com/articles/43855-pwc-ordered-to-pay-625m-to-FDIC-over-taylor-bean-whitakercolonial-bank-audits?eid=311692591&bid=2162019

"TBW also sold loans to Fannie Mae and Freddie Mac. In 2002, loans sold to Fannie represented 85% of TBW’s business, but Fannie Mae canceled its seller/servicer agreement with TBW when it learned that Farkas had personally taken out $2 million in loans that were not actually backed by homes or any other eligible collateral to pay for the buybacks on non-compliant loans that TBW sold to Fannie.

Basically, Farkas planned to sell the eight fraudulent loans (which totaled $2 million) to Fannie to cover the money he needed pay Fannie for other non-compliant loans.

Fannie Mae discovered this fraud when Farkas was unable to make payments on the eight fraudulent loans, but did not communicate its findings to Freddie Mac, its regulator or other interested parties.

Subsequently, Freddie considerably increased the volume of its business with TBW.

Farkas’ schemes were finally discovered when Colonial, which was on the verge of insolvency, applied for $553 million in funding from the Troubled Asset Relief Program."
 

Lee in L.A.

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Pretty sweet scam.
Except for that 30 years in the hole thing.
Hahah!
 

Renee Healion

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The super dramatic narration oughta be a crime itself but here is a video preview. I thought there was a documentary out there but what I found was the American Greed episode "Financial Home Invasion".

Just scanning the local RE records at the time, their loans did not look right.Some things are just wtf from the looks of them. How the books looked good to any of the auditing firms is hard to fathom.

In the full episode, the excess at HQ was preposterous. https://www.cnbc.com/video/3000102246
 

Renee Healion

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So said Arthur Andersen about Enron.
 

Renee Healion

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The ones with the fine--Price Waterhouse Cooper--even screwed up the envelopes at the Academy Awards.

Not a colossal error, just a dopey one, in that case.
 
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