Indeed, these will be hearings (if and when they happen) on financial faux pas, not financial terrorism–and the second kind is the kind we need…

Having new hearings on the Independent Foreclosure Review–which was abruptly ended by a settlement in January 2013–sounds like a good idea.  That’s the story making the rounds today, that Elijah Cummings is asking Darrell Issa (who was my congressman until re-districting) to have hearings on why the IFR was abruptly ended:

“Rep. Elijah Cummings (D-Md.) sent a letter Thursday to committee chairman Darrell Issa (R-Calif.) requesting a hearing on “widespread foreclosure abuses” documented in records his staff recently received from the Office of the Comptroller of the Currency (OCC).“

That last part is what is most disingenuous.  That is, we are to believe that Cummings and his cohort were not aware of “widespread foreclosure abuses” until the OCC coughed up some records recently?  Come on–spare me the dog and pony show.

Hearings will be a whitewash–as per usual

Any new hearings will essentially be a whitewash.  What can we possibly learn from these hearings that we don’t already know about “widespread foreclosure abuses?”  The hearings will be a great platform for grandstanding by Elizabeth Warren, who certainly knows how to give the bankers hell:

“Sen. Warren: All right, so let me ask it from the other point of view. You now have evidence in your files of illegal activity, I take it, for some of these banks. I get that from the evidence you’ve released about the charts, who’s going to get paid what, so if someone believes that they have been illegally foreclosed against, will they still have a right under this settlement to bring a lawsuit against the bank?

Mr. Stipano, OCC: Yes.

Sen. Warren: All right. Now, if a family wants to bring a lawsuit, you’re both lawyers, would it be helpful, if you’re going against one of these big banks, would it be helpful for these families to have the information about their case that’s in your files. Mr. Ashton?

Mr. Ashton, Fed: It would be helpful, obviously, to have information related to the injury, yes it would.

Sen. Warren: Okay. So, do you plan to give the families this information? That is, those families that have been victims of illegal foreclosures, will you be giving them the information that’s in your possession about how the banks illegally foreclosed against them? Mr. Ashton?

Mr. Ashton, Fed: I think that’s a decision that we’re still considering. We haven’t made a final decision yet.

Sen. Warren: So you have made a decision to protect the banks, but not a decision to tell the families who were illegally foreclosed against?

Mr. Ashton, Fed: We haven’t made a decision about what information we would provide to individuals, that’s true, yes.

Sen. Warren: Mr. Stipano?

Mr. Stipano, OCC: Same position.

Sen. Warren: So, I just want to make sure I get this straight. Families get pennies on the dollar in this settlement for having been the victims of illegal activities or mistakes in the bank’s activities. You let the banks – and you now know individual cases where the banks violated the law, and you’re not going to tell the homeowners, or at least it’s not clear yet whether or not you’re going to do that?”

Remember that great exchange?  That was over a year ago–April 11, 2013.  So did the Fed and OCC give info to foreclosed families as a direct or indirect result of this hearing?  I haven’t gotten any such info, nor has anyone I know.

For some time, Cummings and Warren have wanted the records that have now apparently been delivered to Cummings–over a year after the request, which was made on January 31, 2013:

“U.S. Senator Elizabeth Warren and Representative Elijah Cummings want bank regulators to produce documents to show what led them to reach settlements this month with 13 mortgage servicers for faulty foreclosures.

‘It is critical that the OCC and the Federal Reserve disclose additional information about the scope of the harms found to establish confidence in the sufficiency and integrity of the settlement,’ the lawmakers, both Democrats, wrote in a letter dated today to Fed Chairman Ben S. Bernanke and Thomas Curry, head of the Office of the Comptroller of the Currency.”

This is great and everything, but put the bankers in jail already

I don’t want to sound too cynical, but while this is nice and all, it’s taking too long.  Dragging this out doesn’t help homeowners or the country.  It only helps bankers.  It sounds like the records that Cummings received were unaceeptable, but again, nothing we (and he) didn’t already know:

“Cummings said the records the committee reviewed brings those concerns into focus. OCC records showed that the consultants hired to review foreclosure files identified high rates of banks charging excessive fees, failing to process requests for lower mortgage payments and illegally kicking homeowners in bankruptcy out on the street, according to Cummings, who would not provide the confidential documents for review.

In one example, Promontory Financial found errors in 60 percent of the loan modifications conducted by Bank of America. The consulting firm also uncovered similar problems in 21 percent of the cases it initially reviewed for PNC Bank, according to Cummings.

‘It is unclear why the regulators believed it was in the best interests of borrowers to end the IFR when high error rates were identified during preliminary reviews, and more detailed reviews had been prepared to identify the full extent of harm,’ Cummings wrote in his letter to Issa.”

So yeah, that stuff is not good, but it’s namby-pamby  compared to the massive, wealth-transferring fraud that went on and continues to this day.  It doesn’t come close to touching or even pretend to come close to touching the unmitigated and outright fraud perpetrated against someone like say, Mary McCulley, who as David Dayen notes:

“…had her loan changed by U.S. Bank without her knowledge, from a $300,000 30-year loan to a $200,000 loan due in 18 months, and in documents submitted to the court, U.S. Bank included four separate loan applications with different terms.”

You see what I’m saying?  Mary McCulley-level fraud is the type of thing you have a hearing about, not excessive fines of a few hundred dollars.  That trivializes the seriousness of the foreclosure fraud issue.  So yeah, Cummings wants to have hearings about excessive fines, but the McCulley-level stuff will never be discussed.  They run–fast–from that shit.  Because discussion of McCulley-level stuff would necessitate a re-evaluation of the entire system, and they don’t want that.  Indeed, these will be hearings (if and when they happen) on financial faux pas, not financial terrorism–and the second kind is the kind we need…

If the hearing Cummings is requested is held, the reporting that will come out of it will be along these lines:  “Well, charging excessive fines is not good, but that doesn’t mean bankers should go to jail or anything–that’s kind of extreme and people that don’t like the banks are therefore extremist.”  It writes another chapter in the anti-homeowner book of conventional wisdom entitled “How Homeowners Caused The Foreclosure and Financial Crisis”: this chapter will be one about how excessive fees are bad, sure, but not as bad as buying too much house and that ultimately if the banks are at fault for anything, it’s trying to do too much to help homeowners and the excessive fees were just a way to make sure they didn’t lose too much money.

Having said that, I hope I’m wrong about all this…