Economists and media pundits — themselves mostly gentlemanly elites anxious to please corporate America — are slow to make the accusation that what happened here was truly criminal, and so miss the real story. The American people understand that when a group of bankers shuffle some paper unproductively and get away with hundreds of billions of dollars in bonuses, yet cause a loss of $40 trillion in global wealth and cause approximately 100 million people to become unemployed worldwide, there is only one word to describe it: criminal. [...]

Why isn’t the FBI breaking down the doors of the commercial and investment banks and grabbing computers so as to preserve incendiary e-mails that will most definitely implicate executives? Why are managements that caused this still in their jobs and still receiving bonuses? Are the bonuses paid to the folks at AIG that caused its collapse nothing more than hush money? How can the rating agencies still be in business? Why don’t we make one arrest and lean on the bankster to see if he will fold like the cheap suit that he is and name other conspirators? The FBI spends more time investigating $2,000 drug buys than they have to date investigating the biggest heist in the history of the world: $40 trillion, that’s trillion with a T, that’s 40 million bags each containing $1 million.

Talbott’s arguments bring to mind a recent investigative series by the Sarasota Herald-Tribune, which used public records to document who was behind the flipping and mortgage fraud that have decimated the area, with $450 million in defaulted loans.

Nearly 40 percent of the people involved in questionable flips in Sarasota and Manatee counties were industry insiders — real estate agents, developers, lawyers and mortgage brokers. Of the 37 groups discovered by the newspaper, 21 were organized by real estate agents or mortgage brokers.

Some of the people who organized or participated in flips were considered leaders of their profession. One was recognized as one of the top 50 Re/Max real estate agents in the world. Another won multiple awards from the Mortgage Bankers Association of Florida. Some flippers identified by the Herald-Tribune were seen as key clients by local banks and were allowed to pick their own appraisers or had loan approvals expedited to quickly close deals.

In the email thread, Johnson agrees that more criminal investigations are called for, but points out that investigations can be lengthy and more charges actually may be on the way. He adds that an equally worrisome problem were the actions during the crisis that were perfectly legal — such as campaign contributions to politicians who did the bidding of the financial industry.

That’s true, but the criminal piece of this shouldn’t get left behind. I’ve heard the argument before that numerous criminal investigations are ongoing and it’s just a matter of time before we begin to see more prosecutions — but I’ll believe that when I finally see it. In the meantime, the Sarasota stories point out that the real estate industry has a responsibility to do a much better job of policing itself. Award-winning agents who engaged in flipping schemes based on fraud should be hounded out of the profession. And if the industry won’t do it on its own, then someone else needs to do it for them, either by aggressive criminal investigations and prosecutions or some kind of public censure.

As it stands now, everyone up and down the line is getting away with it when it comes to predatory mortgage lending, from the brokers at the bottom to the investors at the top. As Talbott points out, it’s not hard for the American public to figure out that something criminal went wrong in a $40 trillion meltdown. Now it’s the justice system’s turn to do the same.

It turns out, however, that some just went right back into their old line of business, sort of. The New York Times reports that former subprime lenders are making a killing by running loan modification companies that — surprise! — rip people off instead of reworking their mortgages.

From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.

By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.

Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”

Mr. Soussana’s partners at FedMod, as the company is known, were also products of the formerly lucrative world of high-risk lending. The managing partner, Nabile Anz, known as Bill, previously co-owned Mortgage Link, a California subprime lender, now defunct, that once sold $30 million worth of loans a month.

Jeffrey Broughton, one of FedMod’s initial partners, served as director of business development at Pacific First Mortgage, a lender that extended so-called Alt-A mortgages for borrowers with tarnished credit for Countrywide Financial, which lost billions of dollars on bad mortgages before being rescued in an acquisition.

The only problem here is that these financial geniuses aren’t exactly delivering on their loan modification promises, according to The Times.

Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.

The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod’s practices, and compensation for customers.

“Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif. He recounted his experience, he said, because “I really feel bad.”

“I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house,’ ” Mr. Pejman said. “People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification.”

No surprise here.

Mark Thoma at Economist’s View has the best take on all of this:

See, the anti-regulation types are right. A Consumer Financial Protection Agency might stifle valuable innovation like this and prevent these companies from giving consumers the value that they pay for.

I might have that backwards.

Yes, how elitist to suggest consumers should have some protection from these predators. Chalk this one up to yet another lesson not learned from the financial crisis.