There are some deeply nervous and scared investment banks on Wall Street about now, probably wishing they’d never heard the word “subprime.”

“When they start using the Martin Act, you don’t run, you don’t hide, you don’t fight. You settle early, and often,” a veteran of an earlier round of Martin Act subpoenas told us.

With the Martin Act, the prosecutor doesn’t need to prove intent. Think big penalties. Also, the subpoenas “don’t spell out whether matters are civil or criminal in nature,” which could certainly imply that criminal indictments could be forthcoming for those who don’t cooperate.

As with Enron and Worldcom, some of those involved in mortgage and securities fraud should go to prison. Why? Because they are criminals, that’s why.

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Doug Henwood’s Behind the News broadcast on 1/24/08 on WBAI covers the subprime debacle in depth. One illuminating discussion covered race and subprime. In the 80’s-90’s, areas were redlined for race to prevent them from getting mortgages. Then the opposite happened. Those areas were deliberately targeted for abusive mortgages, even to the length of door-to-door salesmen pimping them. The Fed has data showing that people in such areas got much more abusive mortgages even as their credit scores were higher than in white areas and other factors such as income were equal. Yes, they had higher credit scores, not lower. The determining factor here was race. Areas with 50% more people of color were specifically chosen for high pressure, sleazy sales tactics.

Henwood has written a number of left books on economics and finance, has serious chops in the area, publishes an occasional newsletter Left Business Observer, and the spinoff from that, LBO-Talk, is one of the best left listservs around with quality posts and little noise.

The radio show is also available on iTunes.

PS. And in related news, we bring you the new, not satire, YouWalkAway.com which explains, I’m guessing for a fee, how to live in your foreclosing home for months without paying, then walk away from it.

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