[FireBeyond]

> The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values.

Whereas what, companies would never utilize non-standard accounting methods or falsified or exaggerated earnings reports or forecasts?

[heifetz]

Sure companies will and can do that, there has been pretty good history of really large companies committing financial fraud. However, I don't think there ever has been systematic fraud in the US, unlike with subprime mortgages

[Retric]

When you just look at companies that fail, it ends up looking a lot like systematic fraud.

Also, it was not really single family home owners that defaulted in mass. Investors, even those with prime credit ratings, were much more likely to default than non-investors when prices fell.[8][9][10] https://en.wikipedia.org/wiki/Subprime_mortgage_crisis

People talk about subrime morgages as if they meant poor people. However, largely it was people buying up large numbers of homes and then strategically defaulting that caused the real damage.

[slededit]

Fraud was cited as a major factor contributing to the S&L crises. In companies it tends to be in the form of Control Fraud where insiders fleece the corporation.

https://en.wikipedia.org/wiki/Savings_and_loan_crisis

[grey-area]

You probably mean systemic fraud, because there has been plenty of systematic fraud.

The subprime mortgage crisis is in fact an excellent example of systemic fraud which happened in the US, fraud committed by ratings agencies (AAA CDOs) and banks (autosign). The system was corrupt, and probably still is - the incentives are all wrong.

[luckydata]

Are you really sure there's no systematic fraud? The US is pretty corrupt as far as checks and balances on financial dealings goes, I wouldn't be surprised if this became another one of those "who could have known".

[notfromhere]

The bank's role is to verify that the provided information is valid.

Banks didn't care because they were going to sell off the mortgage and they didn't care about the underlying stability of the loan