Yesterday, federal regulators provided the big banks with a sweet deal that offers only surface “enforcement actions” on the banks’ fraudulent and abusive lending practices.
This announcement came on the tails of the release of a new a “study” that tries to scare elected officials and the public about any real effort to hold big banks accountable.
The good news - on Tuesday homeowners, took the fight directly to the 50-state Attorneys Generals and Bank of America CEO Brian Moynihan in North Carolina.
Here’s the bottom line.
Yesterday, three federal bank regulators – the Office of Comptroller of Currency (OCC), the Federal Reserve, and the Office of Thrift Supervision – announced “enforcement actions” against the big banks.
What does this settlement do?
These action amount to little more than a slap on the wrist. Rather than do their job and enforce the law, the bank regulators are instead requiring the banks to hire their own “consultant” to review the bank’s foreclosure practices and then develop a plan for how the banks will follow the law.
As Pastor Lucy Kolin from PICO said, “We don't tell burglars to go hire their own judge and then work together to develop a plan to stop breaking into people's homes. Yet this is exactly what the Fed, OCC and OTS are telling the banks to do.”
When word of this settlement came last week, Chris Hayes, guest host on MSNBC's "The Ed Show", broke it down.
Representative Elijah Cummings (D-MA), also expressed concern.
“I remain deeply concerned with any proposed consent orders that would allow mortgage servicers to continue disregarding their legal and contractual obligations, and that fail to rectify the damage that servicers have inflicted on borrowers, investors, communities, and the U.S. economy.”
The bright side – two of the three regulators, who may have known that these actions were so bogus, that they issued a follow-up statement to make it clear that this was just the first of a series of settlements to the foreclosure fraud scandal and that it in no way obstructs the Attorneys General from negotiating a stronger settlement.
A study, “bought and paid for”
On Tuesday, The American Banker reported on the new study, "The Economics of the Proposed Mortgage Servicer Settlement." The study – paid for by the financial services industry, including the very banks currently being investigated by the Attorneys General – tried to argue that attempts to help homeowners under the Attorneys General settlement would actually hurt them.
Felix Salmon, a business blogger at Reuters, accused its authors – Charles W. Calomiris of Columbia Business School, Eric J. Higgins of Kansas State University, and Joseph R. Mason of Louisiana State University – of “intellectual dishonesty…after taking a long bath in bankers’ dollars.”
The study is riddled with many false claims and competing assertions. Even Iowa Attorney General Tom Miller had harsh words for the study, saying, “This is a flawed study based on inaccurate assumptions, and it reaches grossly inaccurate conclusions. This study was bought and paid for by the industry, and that fact is reflected throughout.”
After all, how much credibility can someone like Charles W. Calomiris have? In August 2008 – just one month before the mortgage market meltdown caused the nation’s worst financial collapse since the Great Depression – he wrote, “fears of a huge loss in home values for most homeowners--and especially for middle-income homeowners--across the United States, and fears of the devastating losses by financial institutions that would accompany them, are greatly overblown.”
North Carolina homeowners and clergy pray for AG’s, confront Bank of America
Amidst all this craziness, homeowners in North Carolina kept their eye on the prize, organizing apress conference and prayer vigil during the National Association of Attorneys General’s Presidential Initiative Summit in Charlotte. While the CEO of Bank of America addressed the audience of Attorneys General, homeowners like Jenny Barker stood outside demanding that BofA negotiate with them.
Barker and her husband lost their jobs due to the recession, and have been fighting with Bank of America for more than a year to save their home.
"All I ask is that the lenders work with us," said Barker. "We are people, we have a story. We are not in foreclosure or unemployed because we want to be. We ask that you work with us so that we can get our lives back together."
See a television report on the vigil from a local news station here.