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Culture War Roundup for the week of May 4, 2026

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The bank fraud section sounds a lot like Matt Levine when Levine claims everything is Securities Fraud. Maybe patio11 is going to become the everything is Bank Fraud guy.

"Everything is bank fraud" is a lot less troublesome than "everything is securities fraud" in that bank fraud still requires the same specific steps (a false statement of fact, made to a bank, under circumstances where you can convince a jury that it was intentional) that it always did. People don't usually do that unless either they are committing fraud or there is some other underlying wrongdoing they are trying to conceal.* Whereas securities fraud lawsuits have been brought based on innocent behaviour including true-but-potentially-misleading public statements, omissions, and honest managerial incompetence. On the other hand, "everything is bank fraud" is more dangerous because bank fraud is a crime whereas securities fraud is civil.

So the real argument about "everything is bank fraud" is

  • On the plus side, it makes complex white-collar cases easier to bring and therefore allows serious criminals who would otherwise skate on Chewbacca defenses to be convicted.
  • On the minus side, it turns a lot of non-criminal (like paying hush money to a hooker) or less-criminal (like small-time tax evasion) wrongdoing into federal crimes with a 30-year statutory maximum sentence because you lie to the bank about it.

There are two other practices which make this worse in practice:

  • Prosecutors pushing cases (both to poorly represented defendants and to the media and public) based on cumulating statutory maximum sentences across multiple counts, when the actual sentence will be a single sentence in line with the Federal Sentencing Guidelines (and the guideline sentence for a first offence of bank fraud is probation unless the loss to the bank exceeds $15k).
  • The fact that "fraud-for-housing" (lying on a loan application to get a loan you wouldn't otherwise qualify for, but do make a good-faith effort to repay) is almost never prosecuted unless there is a quick default (in which case it looks much more like "fraud-for-profit" where someone is planning to abscond with the loan money) - even if there is an eventual default with a crystallised loss to the bank. So some types of fraud-for-housing (like the occupancy misrepresentation Letitia James was charged with) become common behaviour and are magnets for selective prosecution.

* I don't know why Trump systematically and spectacularly lied about the value (and even the square footage) of his personally-owned real estate in the case that led to the Letitia James lawsuit given that both the Trump Org and the banks insist that it didn't affect the credit decision, but normal businesses absolutely do not do this - partly because it is a crime.