Huffington Post op-ed:  Did the IRS Cause the Financial Crisis?, by Bradley T. Borden (Brooklyn):

As the dust from the financial crisis begins to settle, we learn that the lack of IRS enforcement of the mortgage-backed securities industry bears blame for the financial crisis. The financial crisis began when lenders started making bad loans on a large-scale basis in the late ’90s and early ’00s. Big banks purchased these bad loans, bundled them into trusts, and sold interests in the trusts to investors worldwide. The interests in the trusts are mortgage-backed securities. The investors (financial institutions, pension and retirement plans, insurance companies, state and local governments and individuals) did not know the loans were bad, and paid inflated prices for the mortgage-backed securities. Now that the practices of lenders and banks are coming to light, borrowers and investors are seeking to recover losses through lawsuits. And it is obvious that better practices, as required by tax law and enforced through IRS audit, would have prevented or mitigated those losses. …

The IRS possesses a fearsome audit power that gives it access to records and information that the public and litigants are yet to obtain. It should have used that power more effectively before the financial crisis. With hundreds of billions of dollars of potential tax revenue at stake and an unprecedented federal deficit, the IRS can use its audit power now with respect to purported REMICs to collect tax revenue and penalties. Action it takes now should enhance the current federal budget, help stabilize the real estate market and uncover bad actions and bad actors in the mortgage-backed securities industry. Congress and Treasury have an obligation to help the IRS realize its grave responsibility and act with respect to this serious matter.