Man, 30, who stole $11 MILLION from banks to fund his 'rock star' lifestyle ....

The Daily Mail Online ^ | January 4, 2014 | ASSOCIATED PRESS and ALEXANDRA KLAUSNER

[Uncle Chip]

The frontman for a fledgling Los Angeles rock band who was sentenced to seven years in prison in after illegally bilking more than $11 million from banks and using it to fuel his fantasy of being a rock star says he 'regrets losing control' over his fraudulent fortune.

Robert Mawhinney, 30, pleaded guilty in April to five counts, including money laundering. He was sentenced to seven years in prison in October.....

He received more than $11 million in loans from four banks. Prosecutors said he gave lenders statements that claimed he had nearly $8 million in assets, but it turned out his account had less than $10,000, authorities said.

With his borrowed money, Mawhinney managed to afford a $10,500 a month house in the Hollywood Hills and he managed to buy his dreams of becoming a rock star in order for them to come true.

In 2009 he was able to gain access to a recording studio equipped with session musicians and string support....

[NYRepublican72]

Where’s the proper due dilligence on these banks’ part exactly? They should have never given this dude a loan to begin with.

[IncPen]

"This is the result of the FDIC. If the bankers were personally on the hook for the loss (and the angry customers) this would never happen... One lynch mob and it would all be taken care of. Tax payers, taking it in the shorts." FDIC insurance is $250k per customer within a bank. He would have to be dealing with 44 banks to be insured this way.

Plus, I believe the FDIC insurance is for the customer against bank failure. The insurance money would go to the customer, not the bank.

Or are you talking about some other deal that I'm missing?

Yes, the depositors are protected when a bank fails, but the taxpayers are on the hook for this 'guarantee' (see: 1980s, Savings and Loan 'crisis').

My point is that the banks hand fiduciary responsibility over to the government, and thus have free reign to behave like jackasses.

It would be a better world if the bankers feared the depositors. And if the politicians feared the electorate.

[MV=PY]

"Yes, the depositors are protected when a bank fails, but the taxpayers are on the hook for this 'guarantee' (see: 1980s, Savings and Loan 'crisis'). My point is that the banks hand fiduciary responsibility over to the government, and thus have free reign to behave like jackasses. It would be a better world if the bankers feared the depositors. And if the politicians feared the electorate. "

Ah. I agree.

In fact, I don't like it at all when someone deals with another person's money (e.g. taxes). It's a market distortion.

Still, I think the banks are on the hook for this money (unless they fold). Someone will get in trouble and they'll make adjustments.