Special report: The watchdogs that didn't bark

Thu Dec 22, 2011 7:10am EST
 
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By Scot Paltrow

(Reuters) - Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.

The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.

The government also hasn't brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.

But this part of the financial system, a Reuters examination shows, is filled with potential leads:

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Chart showing pctg of home loans in foreclosure since 2001:

link.reuters.com/paz65s Graphic comparing two Wells Fargo foreclosure documents:

link.reuters.com/huz65s   Continued...