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Comment by rcarrigan87 | Hacker News Reader

It's a tough case to make but you can say loan officers were pressured by their managers to falsify info. Managers were pressured by their higher ups. Eventually it comes back to Wall Street firms who were lusting over subprime mortgages so they could make more commissions.

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Step 1: Loan officers pressured by their managers.

Step 2: Managers pressured by their higher ups.

Step 3: ???

Step 4: Profit (for Wall Street firms lusting over subprime mortgages).

In a nutshell why this has been so difficult to prosecute.

The reason is that it was a systematic structural problem. Instead of picturing that chain of command (the one you just listed) inside one organization. Imagine EACH step of that chain is actually a different organization that handles one part of that chain of command. Its like if people want euthanasia in Spain, they distribute the task of getting the arsenic among 20 people so none of them can be prosecuted for a crime. One person takes the vial from 20th street to 15th street. One person enters the building. One person walks up the stairs. etc. Their individual part is so small and they have no knowledge of other parts; it's hard to prosecute them for murder. Finance is kind of like that too. They split everything up; it's hard to prosecute.

Thiel should start focusing his network analysis tools on the internal workings of finance corporations instead of merely using it to create models to predict default risk.

Who profits? The banks that just issued risky loans, packaged them into CDOs and held onto the risky tranches?

(Typical names in that space were WaMu, BofA, Countrywide and Citi.)

Prior to the market imploding these guys were making huge sums off commissions selling to mortgages to the "clients."

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