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Taibbi writes: "The obscene greed-and-arrogance stories emanating from Wall Street are piling up so fast, it's getting hard to keep up."

Senator Elizabeth Warren has been fighting to hold Wall Street accountable. (photo: Andrew Harrer/Getty)
Senator Elizabeth Warren has been fighting to hold Wall Street accountable. (photo: Andrew Harrer/Getty)

Foreclosed Homeowners Got $300, Bank's Consultants Got $2 Billion

By Matt Taibbi, Rolling Stone

29 April 13


he obscene greed-and-arrogance stories emanating from Wall Street are piling up so fast, it's getting hard to keep up. This one is from last week, but I missed it - it's about the foreclosure/robo-signing settlement that was concluded earlier this year.

The upshot of this story is that in advance of that notorious settlement, the government ordered banks to hire "independent" consultants to examine their loan files to see just exactly how corrupt they were.

Now it comes out that not only were these consultants not so independent, not only did they very likely skew the numbers seriously in favor of the banks, and not only were these few consultants paid over $2 billion (over 20 percent of the entire settlement amount) while the average homeowner only received $300 in the deal - in addition to all of that, it appears that federal regulators will not turn over the evidence of impropriety they discovered during these reviews to homeowners who may want to sue the banks.

In other words, the government not only ordered the banks to hire consultants who may have gamed the foreclosure settlement in favor of the banks, but the regulators themselves are hiding the information from the public in order to shield the banks from further lawsuits.

To recap: in the foreclosure deal, 13 banks agreed to pay a total of $9.3 billion to settle their liability in a number of areas, including robo-signing, which is just a euphemism for mass-perjury - robo-signing is the practice of having low-level bank employees sign documents attesting to full knowledge of case files in court foreclosure actions, when in fact they were signing hundreds of files per day, often having no idea whether the paperwork was correct or not.

It was done across the industry and turned housing cases across America into nightmares of jumbled and/or forged paperwork, in which even people who did not deserve to be thrown out of their homes were uprooted thanks to systematic errors by faceless bureaucrats who cut legal corners purely to save money.

All the major banks were guilty on a mass scale, but they worked with federal regulators like the Fed and the Office of the Comptroller of the Currency to secure this wide-ranging, industry-saving settlement, which not only covered the robosigning epidemic but a host of other bad or illegal practices, like the wrongful denial of modifications and the improper levying of (often hidden) fees.

Minus this crucial settlement, banks would have faced enormous uncertainty about their legal liability going forward, and getting a deal that not only gave these companies some legal closure but allowed them to pay pennies on the dollar for their illegal activity was a massive coup for the whole finance sector.

Only $3.6 billion was earmarked for cash payments to the nearly 4 million homeowners covered in the settlement. Most of the remainder of the deal was in other forms of non-cash relief, i.e. modifications or principal reductions.

Now, at the time of the deal, press releases by the Fed and the OCC stated that part of the reason they'd fixed on that particular settlement amount was that regulators had uncovered that banks had made errors or committed illegal acts in about 6.5 percent of the mortgage files reviewed. In other words, the error rate was an important component of this calculation.

But it turned out that this error rate had been calculated with the help of several consultant firms regulators had ordered the banks to hire. Regulators had mandated the hiring of these "independent" consultants back in 2011, and the list of companies included Promontory Financial Group, PricewaterhouseCoopers, Ernst & Young, and Deloitte & Touche. These private firms were hired to review the banks' loan files in search of errors, and collectively were paid by the banks over $2 billion, a staggering sum which ultimately worked out to over $20,000 per file.

With such highly-paid help, it would seem impossible that these consultants could screw up so simple a task as figuring out how many of these mortgage files were corrupt. Regulators came up with the 6.5 percent number this past January, then shortly afterward revised the number downward, saying that only 4.2 percent of some 100,000 mortgage files reviewed were compromised.

But that low number stank so badly that even the Wall Street Journal was moved to check it out, and in late February, in a story called "Foreclosure Files Detail Error Gap," the paper discovered that the error numbers were almost certainly very much higher. From that piece:

A breakdown of the information provided to the regulator shows that more than 11% of files examined for Wells Fargo WFC+0.39% & Co. and 9% of those for Bank of America Corp. had errors that would have required compensation for homeowners, said people who have reviewed the figures. A narrower sample of files - representing cases selected by outside consultants - showed error ratios of 21% for Wells Fargo and 16% for Bank of America, the people said.

The OCC findings appear skewed by the outsize contribution of one bank, J.P. Morgan Chase JPM-0.39% & Co., which reported an error rate far below rivals that oversaw a much larger universe of loans.

J.P Morgan was responsible for more than half of the completed files counted in the OCC review and reported compensation-worthy errors in just 0.6% of cases, according to people familiar with the figures.

So you have numbers from all of these other banks coming in at 9 percent, 11 percent, even 21 percent, and yet somehow J.P. Morgan Chase came in at 0.6 percent. The OCC just took the Chase numbers and averaged them together with the rest and ultimately came up with the 4.2 percent number.

So how did Chase come out so squeaky clean? Well, it seems they developed quite a rapport with the government-mandated consultants who were hired to review their loan files. This is from that WSJ report:

Two Deloitte employees who performed the review for J.P. Morgan in a Brooklyn office building said workers were encouraged by supervisors to examine pools of loans they knew would be less time-consuming or error-prone as they tried to hit loan quotas.

One of these employees said that at an event last year known in the Brooklyn office as "March Madness," Deloitte officials encouraged reviewers to avoid problematic loans originated by EMC Mortgage, a troubled mortgage lender J.P. Morgan acquired in 2008.

So basically Chase allegedly warned the consultants off their problem loans and incentivized the consultants to examine the less-fucked-up loans. Employees of another of Chase's auditors, Promontory, were reportedly given gift cards of up to $500 for "completing a certain number of files quickly."

The whole thing was a joke. Government orders banks to hire auditors to investigate robosigning, then banks induce said auditors to robosign the investigation! Because that's exactly what that would mean, if there were financial incentives to finish masses of files quickly. It's horrible, obviously, but on another level, it's so ingeniously corrupt, one almost has to tip a cap to whoever thought of it.

Incidentally, what were Chase's real numbers? I mean, if it hadn't been a consulting firm hired by Chase for buttloads of cash to do the study, what might an auditor have concluded? Well, as reported by (among others) David Dayen at Naked Capitalism, we got a glimpse into one possible truth when the HUD Inspector General released a report that included an ad-hoc survey of Chase loans:

For Chase, we also reviewed 36 affidavits for foreclosures in judicial States to determine whether the amounts of borrowers' indebtedness were supported. Chase was unable to provide documentation to support the amounts of borrowers' indebtedness listed on the affidavits for all except four. When we reviewed the four affidavits, three were inaccurate. Specifically, the amounts of the borrowers' late charges and accumulated interest did not reconcile with the information in Chase's mortgage servicing system.

As Dayen jokingly pointed out, that means the gap in the stats was relatively small - Chase's loans were either 97.2 percent fucked (as HUD found), or 0.6 percent (as Chase/OCC found). Somewhere in between there.

Anyway: In March, a Washington law firm called Williams and Connolly sued the OCC for failing to properly ensure that the auditors would be truly "independent." The firm declined to say on whose behalf it was suing. Around the same time, members of congress like the House's Elijah Cummings and new Massachusetts Senator Elizabeth Warren started to become interested in these consulting arrangements, expressing concern that perhaps the settlement number had been reached in error.

Fast forward a few weeks. It's April 11th, and Warren, along with Sherrod Brown and Jack Reed, held hearings on this whole issue, bringing in officials from the OCC along with some of these consultants to get to the bottom of a number of issues, including, most importantly, how the settlement was calculated, and who decided who would receive how much compensation.

There were two major revelations from these hearings, in addition to the ongoing revelation that the suits who people the country's financial regulators are sniveling, obfuscatory weasels who clearly view the banks they're supposed to be regulating as a bunch of stand-up dudes while the taxpayers who are always demanding this or that (and the politicians who represent them) are humorless pains in the ass.

In terms of new revelations, the first was this one, a real shocker: that apparently, it was not even the obscenely overpaid, lapdog consultants who made the final decisions about which homeowners fell into which boxes in terms of settlement compensation. Incredibly, it appears that the banks themselves were allowed to do that sorting process!

This came out when Warren was interviewing private consultants from PriceWaterhouseCoopers, Promontory, and Deloitte and Touche:

Senator Warren: I just want to take a look at the Independent Foreclosure Review Payment Agreement details. I think you've probably all seen this one page agreement that lists all of the things that the banks did wrong and then boxes for how many people fall into each category and how much money they're going to be paid. Is that right? You've all seen this? [Panel indicates they have seen it.] And this was put out - who put this out? I think this is put out by the OCC and Federal Reserve. Is that right? As part of the settlement details.

In the settlement there is a one-page document that lists all the various misdeeds the banks engaged in during the foreclosure process, then goes on to list how many homeowners were victimized by each activity. Warren is showing this document to these consultants and she's asking them, did you prepare these statistics? She goes on - listen to the answers from the auditors:

Senator Warren: So I just want to ask you about this. It has some pretty amazing categories here. The first category is about service members who were protected by Federal law whose homes were unlawfully foreclosed. It's got people who were current on their payments whose homes were foreclosed. It's got people who were performing all of the requirements under a modification who lost their homes to foreclosure. And it tells how many people fall into each category and how much money the people in that category will receive. And, it ultimately resolves what will happen to 3,949,896 families. So the question I have is having resolved this for nearly 4 million families, who put the people, the families, into each of these boxes. Is that what your firms did, Mr. Ryan?

Owen Ryan, Partner, Deloitte & Touche LLP: No, Senator, we did not.

Senator Warren: So who put them in?

Ryan: I'm not sure how that schedule is prepared. I saw it for the first time yesterday.

Senator Warren: Mr. Flanagan?

James Flanagan, Leader, U.S. Financial Services Practice, Pricewaterhouse Coopers LLP: Same response. We were not involved in the accumulation of that information.

Senator Warren: Mr. Alt?

Konrad Alt, Managing Director, Promontory Financial Group: Senator, I've seen the schedule but I'm not familiar with the basis for its preparation.

Having established that the consulting firms did not do this sorting, Warren presses toward the obvious conclusion:

Senator Warren: So that leaves us with the banks that broke the law, were then the banks that decided how many people lost their homes because of their lawbreaking. And, as a result, how many people would collect money in each of these categories. Is that right,Mr. Alt?

Alt: Senator, I'm not familiar with the basis for the scheduling.

Senator Warren: So far as you know, there's no independent review of the banks' analysis . . . You looked at 100,000 cases, and the banks have now put 4 million people into categories and resolved finally how much they will get from this review by the OCC and the Federal Reserve.

So that's bombshell Number One - it wasn't the auditors who decided which homeowners fell into which categories, it appears to have been the banks themselves. Bombshell Number Two? The representatives of the OCC and the Fed - remember, federal regulators whose job it is supposedly to protect ordinary people - flatly refused to give any information about the real results of their surveys, i.e. their inquiries into what the real error rates were.

Even worse, when pressed on the question of whether they would deliver any evidence of wrongdoing they uncovered to private parties who might want to sue, they hedged.

In these exchanges, Warren questions Daniel Stipano, deputy chief counsel from the OCC, and Richard Ashton, Associate General Counsel for the Board of Governors at the Fed. There are two key sequences.

In the first, Warren asks both men if they will make public what they know about the extent of the illegality and errors - whether the real error rate was, as she put it, 1 percent or 90 percent. But the two officials respond in gibberish legalese (if you watch the video, Ashton in particular seems to take pleasure in dicking the Senate around with his verbose non-answers), repeatedly forcing Warren to pin him down to their actual concrete position, which turns out to be, "Fuck you." For example:

Senator Warren. So let me just make sure I understand this completely. I want to know on a bank-by-bank basis the number of families that were illegally foreclosed on. Will you give me that information?

Mr. Stipano. Eventually, we are going to issue a statement to the public where we provide additional information, but if we go through the processes that I described previously, we can share it to Congress in its oversight capacity.

Huh? I have no idea what that means, but it sounds positive - it did to Warren, too:

Senator Warren. So you are saying you will make that information publicly available?

Mr. Stipano. I did not say that. I said that we are planning on issuing a public statement that wraps up the IFR that provides additional information . . .

Ultimately, both the Fed and the OCC turned out to be united on the issue. They'll release something, but it won't be the real numbers. Frustrated, Warren asked them where the public is supposed to get the numbers, if not from them. Their answer is, well, they can maybe pull it out of their butts, if they get lucky - not our problem:

Mr. Stipano. Well, sometimes you get information through third parties, through outside sources. But in this case, that is not the case.

Senator Warren. So unless someone throws a rock through the window with this information tied to it, you will not release it, is that what you are saying?

Stipano here replies with more gibberish:

Mr. Stipano. To the extent that the information is confidential supervisory information derived from the exam process, it is subject to privilege.

From there, Warren asks a more specific question. What if someone wants to sue a bank for illegally tossing them out of their home? And what if you have evidence in such a case? Wouldn't such evidence be, you know, helpful to those people? Stipano helpfully agrees, yes, it would be helpful:

Senator 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 have released about the charts, who is 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. Yes.

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

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

Which leads to the next question - having acknowledged that it would be helpful, will you help?

This seems like it should be an easy answer, but it isn't:

Senator 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 is in your possession about how the banks illegally foreclosed against them? Mr. Ashton?

Mr. Ashton. I think that is a decision that we are still considering. We have not made a final decision yet.

Senator 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. We have not made a decision about what information we would provide to individuals, that is true. Yes.

Senator Warren. Mr. Stipano?

Mr. Stipano. We are in the same position.

Obviously these guys can't come out and say, "We're not giving anybody anything. Blow us." That would cause too much of an uproar. So they just say they haven't decided, and we all know what that means. Warren tries to frame the issue in the most embarrassing way possible, but the witnesses prove immune to such embarrassment:

Senator Warren. So I want to just 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 banks' activities. You let the banks, and you now know individual cases where the banks violated the law and you are not going to tell the homeowners, or at least it is not clear yet whether or not you are going to do that?

Mr. Stipano. We have not made a decision on what we are going to tell the homeowners.

All of this just confirms what we already suspected about the foreclosure settlement. This whole enterprise was conceived by the government solely as a means of dealing with the explosive problem of containing the private liability of these "systemically important" companies. Not only are we not prosecuting these firms anymore, we're also actively in the business of protecting them from litigation.

No other conclusion is possible from this testimony, which shows that our two primary regulators not only withheld information about bank illegality and errors prior to the settlement, but plan on continuing to do so going forward. There can be only one reason for concealing that information from the people affected by those "errors." your social media marketing partner


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+94 # CAMUS1111 2013-04-29 11:22
nationalize them...NOW!
+3 # Joe Bob 2013-04-29 20:26
Bada Bing
+89 # ghostperson 2013-04-29 11:31
Ever heard of contempt of Congress?
+22 # edge 2013-04-29 12:48
Quoting ghostperson:
Ever heard of contempt of Congress?

Yep, throw the Attorney General in jail NOW!
+3 # Eldon J. Bloedorn 2013-04-29 21:27
It appears that when the accounting firms were hired, there was no clear mandatory requirement that those firms were legally required to report any and "all" findings to the senate. The accounting firms did not truthfully answer to the senator because it appears they were not required to do so. I'm not saying the two billion spent to hire these firms was a total joke, but the real joke was played on the public.
+6 # Eldon J. Bloedorn 2013-04-29 23:02
The "deal" was rigged from the beginning. It appears that there was no legal compulsion to "make" any of the clowns tell the "whole" truth.
+1 # RLF 2013-04-30 06:08
or you mean the Senate. Why didn't Warren supeana(sp) the records and release them? Seems to me that she has that power.
+1 # Eldon J. Bloedorn 2013-04-30 08:51
Maybe so much of this questioning was purely B.S?
+51 # CenTexDem 2013-04-29 11:48
Typical act of Congress thanks primarily to the GOP instead of passing, as progressive Dems repeated urged, a modified Chapter 13 law for the owners of homes financed with toxic mortgages like the affluent now get under Chapter 13 for their second "lake house" but giving primary home owners the ability to appraise their upside down home's present fair market value and pay that value with interest over 15 years to the lender that would have avoided all kinds of waste and costs to homeowners, lenders, other homeowners in toxic mortgage subdivisions, property tax revenues, etc., etc. and would be just and right for both homeowner and mortgage company.
+32 # restore2america 2013-04-29 12:21
Our government is an organized criminal enterprise.
+25 # cordleycoit 2013-04-29 12:37
When will the sheep learn to bite back? Or do we live in a world of compliant wooses?
+26 # Dumbledorf 2013-04-29 12:44
Matt Taibbi is one of the best writers around. No matter what the subject amtter he usually hits the nail on the head. Now, can we get him to write some articles about the blatant fraud and theft in the private property tax scam industry, in which bogus liens are sold to corporations working in collusion with municipal governments (corporations also)and corrupt banks and then these bogus "liens" are then re-sold to investors and then used again to create derivatives, which are sold again on the open market??????
Help us please, Matt....
+48 # teineitalia 2013-04-29 12:58
Following Taibbi's last post, I thought I'd heard it all... and now this. Thank god for the gonzo journalist of our time, Matt Taibbi, and also for the courage and persistence of Senator Elizabeth Warren.

However, the arrogance of the banks is quite clear. Too many important people have their backs. Too many rich, important people.

It's long past time to nationalize the banks, rid ourselves of the Federal Reserve and prosecute the banksters who have profited from greed and corruption in ways that are hard to believe.

I don't know if I can stomach another story of bank hubris this inhumane and egregious. Peoples lives have been ruined by these events. It's long past time for action here. In the meantime, move your money to credit unions while you can.
-3 # FDRva 2013-04-30 00:17
I share your concerns--if not your financial connection to the credit unions.

I like Taibbi and Warren, too.

The elephant in the room--is Barack Obama--whose expansive bailout generosity to his campaign's financial angels on Wall Street makes W Bush look nearly like an anti-Wall Street progressive, by comparison.

Funny, that you left that out.

As did Sen Warren & author Taibbi.

Senator Warren might be electable as President--but not if she is the candidate of Wall Street's Obama White House.

Hillary R. Clinton has already declined that dubious honor--to her great credit.
+1 # FDRva 2013-04-30 00:31
Liz Warren might make a fine President.

It would be wise, however, for her to put some distance between her possible candidacy and the current pro-Wall Street Administration- -unless she plans on running for the Republican nomination.

Obama's undertone about privatizing Social Security to Dem financiers is not apt to corral many Democratic voters.
+1 # FDRva 2013-04-30 00:49
Do those rich, important people protecting the Wall Street thieves the author professes to deplore--includ e Barack Obama, president of the United States?

No mention is made of White House efforts to thwart Wall Street--because no such efforts were ever undertaken. This president knows which side his butt is breaded on.
+5 # RLF 2013-04-30 06:12
It is also the laziness of the government workers and their comfortable health care and the comfortable pensions in both the OCC and the Fed that allow this crap to happen. Seems to me that the accting firms that did these surveys should have their creditials taken away. They are no longer trusted to be separate and what possible use are they but to cover up crime?
+4 # Renter1 2013-04-30 20:16
Actually, the accounting firms should be prosecuted. They materially misrepresented facts to a Federal court as part of settlement negotiation. They represented their findings as the result of an investigation that was diligent, factual, and independent, when it was none of the above.

Dr. Warren is smart, but she has no special mojo. She discovered how corrupt the process was with an hour's worth of fairly straightforward questions that could have been asked by ANY competent attorney. And as she points out, the regulators she is questioning are themselves attorneys. It's simply not credible that they did not know what was going on.
+34 # Barbara K 2013-04-29 13:23
I hope that the home owners take the appropriate banks to court and sue them out of business. What the banks did was pure grand theft to these homeowners, give them back their homes, replace them, or pay for them. Why aren't these banks being charged with grand theft?

-2 # FDRva 2013-04-29 23:36
Because Barack Obama is president--and the banks you justifiably denounce--made him president--prob ably with your vote.
+8 # James Marcus 2013-04-29 14:13
Foxes in the Henhouse, and it's a Free-for ALL..
New? not. except the 'frenetic pace'.

Thank You, CONGRESSIONAL OVERSIGHTER (whores), and President (Barf) Obama.
Did I forget the 'Supreme Justices' (Majority; laying in wait, just in case)?

Is this a 'Slam, Dunk? or what?
Who will step forward, and upset (Upend!) this Sweet Little Apple Cart?
JFK did; RFK would have...... (even included John Jr., to B ABSOLUTELY 'CERTAIN')
-7 # FDRva 2013-04-29 23:29
Thanks 1960s generation white liberals for your stupidity. Hopefully, your individual drug use was less than "James Marcus."

Barry Obama owes his career to you--and his financial community patrons thank you for your reverse racist stupidity,too.

They have received many billions of 'bailout' dollars thanks to you mistaking an obvious Harvard man--for an every day American "Black man."
+16 # MainStreetMentor 2013-04-29 14:27
"... will not turn over the evidence of impropriety..." ARE YOU KIDDIN' ME?!?! Demand a court order! What the &$%@#! is the matter with this friggin' CONGRESS? This is beyond outrageous ... this is criminal, no if's and's or but's. Where the HE** is our "upstanding" Attorney General?!? He is NOT doing his job. President Obama needs to fire that clown!
-8 # Marlene 2013-04-29 14:30
Great article, except for the addition of the "f" word, making it impossible for me to share it on my facebook pag.
+15 # Kootenay Coyote 2013-04-29 15:58
The story itself exposes the real obscenity.
+31 # Onterryo 2013-04-29 14:30
But don't you just love Sen. Warren's examination?! She is like a tiger among mice and rats!
0 # Eldon J. Bloedorn 2013-04-29 23:11
I like senator Warren. I contributed to her campaign. But, facts are facts. Fact # 1. Those whom she questioned apparently had no legal obligation to respond to her questions. Fact # 2. If those questioned had no legal obligation to respond, what happened was simply successful "grandstanding. "
+3 # Regina 2013-04-30 09:12
Better such grandstanding than the usual gladhanding that goes on between Congress members and corporations.
0 # Eldon J. Bloedorn 2013-05-02 20:51
I would agree with you as regards the gladhanding idea. I like senator Warren, contributed to her campaign. She, like all politicians, need public exposure, stay in the media stream, public awareness. So, she had her day. She got what she wanted-public exposure. But, beyond that, the accounting kids got lots of cookies and ice cream.
+3 # RLF 2013-04-30 06:14
Problem is that information comes out ad then nothing...absol utely nothing is done. Justice doesn't take them to court and if they did the corruption in the brains of federal judges would free them and make them sound like heroes. We're driving with no oil pressure and over heating...won't be long now before we are on the shoulder.
+5 # Patbilla1 2013-04-29 14:35
I'm not sure my favorite senator had all her ducks in a row when she went into that tete-a-tete.Oth erwise she would have charged them on the spot with SOMETHING, like fraud, for example for whicxh they were well paid.
-5 # RLF 2013-04-30 06:16
This has all come to light under the Obama administration and OBAMA is ultimatly responsible for nothing having been done and no criminals being put in jail. He is just so useless!
+6 # cafetomo 2013-04-29 14:59
That clanging you have been deafened with for some time are the huge brass balls on their kind. For two billion dollars, this lot can well afford pants with plenty room for them to swing about.

These days, I've little wonder where my tinnitus is coming from.
+21 # oakes721 2013-04-29 15:31
Has "Withholding Evidence" been legalized, too? Those questioned have clearly and contemptuously displayed who's buttering their bread. They should have been immediately reprimanded into custody and have their homes taken from them.
-4 # MidwestTom 2013-04-29 15:32
I recently came across the following article from the HUD Archives, which throws a lot of light on how we originally got into the housing mess:

I think that you will find it informative.
+2 # RLF 2013-04-30 06:19
This was done because the banks were refusing to make mortgages to people of color. Would it have been better if we allowed them to ignore that we went through the 60's civil rights movements? Also 2.4 trillion is peanuts when it comes to the mortgage market. Did you read Taibbi's last article where the banks were rigging the mortgage market which was around $275 trillion? Get your racist glasses off pal.
+5 # dkonstruction 2013-04-30 07:26
Quoting RLF:
This was done because the banks were refusing to make mortgages to people of color. Would it have been better if we allowed them to ignore that we went through the 60's civil rights movements? Also 2.4 trillion is peanuts when it comes to the mortgage market. Did you read Taibbi's last article where the banks were rigging the mortgage market which was around $275 trillion? Get your racist glasses off pal.

RLF, we need to separate Fannie and Freddie's first mortgage activity i.e., providing fixed rate mortgages to low and moderate income homebuyers that the banks would not lend to (and you're absolutely right that a lot of this was "redlining" in poor and working class communities of color) from the other role that was pushed on them to become the main buyers of securitized mortgages under the pretext of keeping "liquidity" in the first mortgage market. This was the scam and it should never have happened (along with Fannie going public and becoming a for-profit publicly traded company).

So, yes we need to bring back Fannie and Freddie's original mission (providing fixed rate mortgages) while at the same time getting them out of the biz of buying securitized mortgages on the secondary market. They should also be kept as a non-profit government sponsored entity and not as a for-profit publicly traded company beholden to maximizing "shareholder value."
+4 # dkonstruction 2013-04-30 07:22
Quoting MidwestTom:
I recently came across the following article from the HUD Archives, which throws a lot of light on how we originally got into the housing mess:

I think that you will find it informative.

Unfortunately, the role of Fannie and Freddie was changed from simply providing affordable "vanilla" fixed-rate mortgages to low- and moderate-income homebuyers to the purchaser of securitized first mortgages on the secondary market. The loans that Fannie and Freddie made were not the problem and they had a very low default rate because they were not "exotic" mortgage products with teaser rates, interest only etc. But, as soon as we allowed the banks to bundle mortgages and sell them on the secondary market Fannie and Freddie became the main buyers with the rationale being to keep "liquidity" in the mortgage market. You are right that this never should have happened. At the same time, we need to separate this activity (the purchasing of bundled mortgage securities) from what should have been Fannie and Freddie's only role which was to provide affordable fixed rate mortgages to low and moderate income homebuyers that the banks would not lend to.
+12 # Michaeljohn 2013-04-29 15:39
1) The banks have convinced the Administration wusses that the economy would most surely collapse if all of the information gets out.
2) They're all on the take.
You choose....
+19 # Working Class 2013-04-29 15:53
So let me get this straight. We socialize the banks losses when they are on the verge of collapse. However, we continue to allow them to privatize their profits. Then when the “cops” (and I use that term in the broadest way possible) find that the banks have robbed the citizens of our county, our government protects the banks and shoots the hostage so the banks don’t have to spend their ill-gotten money on bullets. Fantastic!
+2 # RLF 2013-04-30 06:20
And hides the evidence!
+18 # Kwamined 2013-04-29 16:04
This obscenity -- of ongoing felonies by the banks; of the regulatory coddling of the banks -- is enabled by none other than Barack Obama. At any time in the past 4+ years, with one executive order, he could have directed his AG to prosecute proven crimes by bankers and banks rather than negotiate settlements that amount to bailouts. Both men are moral failures who will go down in history as house slaves for Wall Street.
+8 # treadlightly 2013-04-29 17:57
For every action there is an equal opposite reaction.

That is no longer true is it? What will the repercussions be for failing to let nature take it's course?
To delay the inevitable only exaserbates the damage. Justice really is for sale. Even at the highest level.
+10 # fredboy 2013-04-29 18:01
The money houses are now truly vampirish, as they locate the vein then suck it dry. With no concern regarding punishment--the Obama "justice" team has announced they are exempt from prosecution.
+8 # Kathymoi 2013-04-29 18:11
When did the United States disappear?
Was it when Ronald Reagon was elected?
Or did it take a decade or so after his election?
+2 # RLF 2013-04-30 06:22
Bill Clinton and Barack Obama have given it a big shove over the cliff. All of the presidents since Raygun have been on the same page.
+5 # FDRva 2013-04-29 18:14
And the author-- and Senator Warren--just now discovered this pro-Wall Street Obama Administration malfeasance! Heavens to Betsy!!

Matt Taibbi will run well in the 2016 New Hampshire Dem presidential primary--unless , of course, Sen. Warren runs.

And I think that if Sen. Warren intends to run she ought to tell the truth about the Obama Administration' s unseemly relationship to Wall Street--which every Democratic activist suspects--but prefers not to think about.
-2 # FDRva 2013-04-29 22:10
If this party--is about protecting Barack Obama's "ahem" 'legacy.'

The Party is over.

A closer un-sanitized look at Goldman Sachs books is apt to tell the tale.

It is highly probable that Barry Obama became President because he was a Harvard man--whose complexion made him a better salesman for Wall Street's agenda, than the available alternaves.

Say it ain't so Barry.

Naw, don't bother--you are what you are.
+3 # MidwestTom 2013-04-29 19:48
Why did we take an interest in GM to bail it out, but not the banks?
+4 # dkonstruction 2013-04-30 07:30
Quoting MidwestTom:
Why did we take an interest in GM to bail it out, but not the banks?

Because GM had a unionized workforce and by having the government purchase a steak they were essentially able to break the union without appearing to do so (forcing future workers to take a 50% pay cut in the process).

If the banks had a unionized workforce I think we would have (temporarily) taken them over or taken a stake in them to break their unions as well.

Instead of bailing out GM the government should have taken them over and turned them over to the workers so that they could operate as worker-owned cooperatives which would have protected both current as well as future auto workers.
+7 # photonracer 2013-04-29 20:04
In 1821, the Supreme Court issued its decision in Anderson v. Dunn,[1] which held that Congress' power to hold someone in contempt was essential to ensure that Congress was "... not exposed to every indignity and interruption that rudeness, caprice, or even conspiracy, may mediate against it."[2] The historical interpretation that bribery of a senator or representative was considered contempt of Congress has long since been abandoned in favor of criminal statutes. In 1857, Congress enacted a law which made "contempt of Congress" a criminal offense against the United States.The criminal offense of "contempt of Congress" sets the penalty at not less than one month nor more than twelve months in jail and a fine of not less than $100 nor more than $1,000.[10]
That ought to scare the bejeezus out of those silly lawyers.
+2 # Walter J Smith 2013-04-29 22:19
If it "ought to scare the bejeezus out of those silly lawyers," then, why doesn't it?
+3 # reiverpacific 2013-04-29 20:21
When we went to HUD to get help in re-financing our recently-bought property after the collapse caused by the same stinking, sub-conscious peeg-dogs that started the decline in national and international grassroots fortunes in the first place, we were told by one of the secretaries that the none-too-well-p aid, overworked but very helpful and persistent assigned officers, agents or whatever their official status-name is, were constantly having to go to "further education" seminars just to keep up with the latest dirty tricks that the major banks were coming up with to get around any legal paths that these folks have to negotiate to help people stay in their homes.
And it looks like the hubris-artists are still winning. These bastards make the Mafia look like Sunday School teachers.
So where is the lobbyist-owned government and president in all this? Probably trying to catch up in some cases and going right along with the flow of fortune in others.
Warren's main problem is that she is practically alone in speaking econo-corruptio n legalese better than it's perpe-traitors and they are still at it. I hope she can muster some support but might end up as a lonely voice in the Beltway echo-chamber!
I respect her energy and zeal but they are out to wear her down. maybe she needs some critical-mass behind her but the owner-media won't put anything to form behind her.
Not hearing much from the regular reactionary infesters of RSN on this, what? Maybe they feel vulnerable too.
+1 # Walter J Smith 2013-04-29 22:17
"Now it comes out that not only were these consultants not so independent, not only did they very likely skew the numbers seriously in favor of the banks, and not only were these few consultants paid over $2 billion (over 20 percent of the entire settlement amount) while the average homeowner only received $300 in the deal - in addition to all of that, it appears that federal regulators will not turn over the evidence of impropriety they discovered during these reviews to homeowners who may want to sue the banks."

It is an example of how Obama rewards the most corrupt Wall Streeters as part of his change from business as usual to busines more corrupt that we have ever imagined before.

In fact, has his Administration ever seen any corruption it didn't reward handsomely, with, of course, broadly bi-partisan Congressional blessings?
+1 # FDRva 2013-04-29 23:06
Nice try, photonracer.

Barry Obama is what he is.

His election made history. I am proud of my country for electing him. Previously, only corrupt white Harvard grads could aspire to to the Oval Office.

Barry's Administration has made many Wall Street scoundrels even richer than they were before.

But that's what his election was supposed to do. Duh?
+10 # Renter1 2013-04-30 00:27
A question for the lawyers in the audience: Isn't the willful concealment of evidence of criminal activity ITSELF a crime? This is clearly what these so-called "regulators" are doing. Isn't this grounds to prosecute them for obstruction?

Holder has made it clear that he will not prosecute banksters and their cronies, no matter what they do. But this kind of thing clearly violates state laws as well.

Same question, regarding torts: Isn't the willful concealment of evidence of a tort a crime, or make you a party to the tort?

Consider Morris Dees, and the Southern Poverty Law Center, who made some novel applications of law to go after violent white supremacist groups, and had a lot of success. The fact that the DOJ is compromised does not mean we have exhausted all the options in the legal system.
-2 # Ph0enixInfern0 2013-04-30 16:26
Here's the irony to all of this...
Liz Warren (Starting her DC career as head of the financial oversight council for TARP under W.)was an adviser to Obama and a Special Adviser to Tim Geithner during the Bailouts in round 1 of the Obama Administration.
Now these are insider positions and it also means she knew what was up with he wall street situation waaaaay better than a lot of people would. Instead of stepping out to get Wall Street jailed when it was possible, she got fast tracked to senatorship as a "Reformer".
Now her talk is big, and her lines show she studied Ted Kaufman (he took over for Biden and was somewhat harsh on the bankers 1st, Alan Greyson (During the hearings to decide if there was going to be a FED audit before that failed), and her look is bit off of Jill Stein but when the action was necessary/calle d for she went with helping the banks.

Quite honestly Liz Warren's timing couldn't have been better. It helped to also cover for Obama making the cuts Romney would have made that the GOP called "entitlements". She pulled rhetoric that won't be acted on for rabble rousing on voter support for the party. (Rand Paul did the same thing with drones. 8hrs long filibuster and no reports of how the government as a whole is fine with the drone use, how the government as a whole isn't stopping them, that we have a drone caucus, what countries we've been drone bombing, or how many innocents have been killed. No human face and no real facts!)
+2 # lark3650 2013-05-01 07:28
Elizabeth Warren is the kind of "Profile in Courage" that John Kennedy wrote about.

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