The 'Due Diligence Underwriters' in PBS' New Documentary on Mortgage-MBS Fraud

Source: PBS
Here's a video from PBS' new documentary 'The Untouchables', which is about the mortgage and MBS fraud epidemic and why nobody at the big banks went to jail. In the video they interviewed the 'due diligence underwriters' who were contracted by banks to analyze pools of loans and instructed to "disregard clear evidence of fraud." The due diligence underwriters said it was like a party atmosphere, they were moving fast and not looking closely at the loans, and they'd all laugh at the fraudulent loan docs.

But, it was fine because the banks created mortgage-backed security credit default swaps to hedge these portfolios, right? So why did the taxpayer and the Federal Reserve's balance sheet end up being the credit default swap? Can anyone in the opaque financial invention department at the TBTF banks answer this?

Watch the documentary tonight at 10pm EST (

Watch Alarm Bells In The Housing Market on PBS. See more from FRONTLINE.
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