Stabu’s description sounds like William Black tells of the S&L crisis.
1. Make loans to people who have poor credit scores. Advertise this as “promoting diversity” and market to minority groups with poor / unstable employment history previously unable to get loans. You can charge high interst rates as you are the only place they can get loans. Bank officers get big bonuses because of all the loan fees they generate. The bank looks awesome in the initial years.
When the poor credit risk customer’s loans start to get in trouble, offer to “give them a second chance” and refinance. Keep the scam going for several years.
Retire with a huge golden parachutte retirement package and the reputation of a great turn-around artist.
Then the loans begin to fail in large numbers, the bank goes under, but the CEO is already out with LOTS of money. Stock and bond holders take the losses.
2. CEO gets company stock as a part of his compensation package. Using the corporation, he borrows lots of money cheaply and buys back company stocks sending stock prices much higher. CEO sells his stocks at the top, then retires rich.
This leaves the company with big debts that may take it down. Creditors and the banks’ shareholders take the losses. CEO gets rich. Never prosecuted.
A clean robbery and getaway.
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