This Huffington Post piece with link to NYT brings up again the issue of what type of unfair dealing rises to the level of criminality. In this case the Eastern Florida Financial Credit Union was brought down by poor investments made very late in the game in toxic CDOs. What the Inspector General for the National Credit Union Association does not reveal is who peddled the CDOs to the Credit Union. An area for further exploration would be whether the seller of the CDOs knew they had an unqualified buyer (in fact, not necessarily at law), whether the seller gave any consideration whatsoever to this fact, how the selling business unit and individuals were compensated, and what the general motivational system in place was. Society needs to know these facts so that buyers can beware of whom they do business with and legislative and regulatory bodies can determine what laws need to be on the books to prevent predation and to bring into the rational framework of decision makers an understanding of the personal risk they take when robbing unsuspecting marks.
The Inspector General’s report cites mismanagement of the Credit Union. They grew too aggressively and took risks they did not understand. I can go so far to say that the Credit Union probably suffered from the same ambition and greed that pervades the system, with stupidity added on as a bonus. They were not the “The Smartest Guys in the Room”. That is also disturbing. But it does not excuse the shark that sold them junk paper for more than it was worth on the day of sale.