Lee Farkas, mortgage lender, charged with TARP fraud

The Troubled Asset Relief Program was created by the government to help lenders in trouble. The estimated amount that TARP would cost has been substantially less than expected. However, the Securities and Exchange Commission is prosecuting some mortgage lenders for fraud that amounts to $ 1.9 billion. Lee Farkas, chairman of a mortgage lender, has been charged in federal court for defrauding the TARP program.

Resource for this article: Lee Farkas, mortgage lender, charged with TARP fraud By Personal Money Store

TBW Mortgage lenders

The bulk owner and chairman of mortgage lender Taylor, Bean and Whitaker, Lee Farkas, was responsible for investments that mortgage lender sold. During the administration of TARP funds, TBW sold more than $ 1.5 billion in “fabricated or impaired loans” to Colonial Bank. These loans helped Colonial qualify for bailout funds from the federal government. Taylor, Bean and Whitaker filed for bankruptcy in 2009.

The SEC challenges against Lee Farkas

Lee Farkas, according to the SEC, set up frauds that ended up costing the federal government's TARP fund $ 1.9 billion. As outlined by the SEC, Farkas sold $1 billion in loans that he did not disclose were damaged, and half again as much in fake loans. Lee Farkas also allegedly headed up a “bogus equity investment” that assisted Colonial Bank qualify for TARP funds. These actions, along with other alleged infractions, resulted in losses of a lot more than $ 1.9 billion of TARP funds.

Oversight by the Fed to increase

The amount of oversight the Fed has is being ramped up under the watch of Ben Bernanke. The Fed and Bernanke have come out in support of the financial reform bill in Congress. Separate from the financial reform bill, the Fed and SEC are also working together to beef up oversight and prosecution of financially dangerous or fraudulent practices.