This is wonderful news.
“The banks are paying $95 million, for example, to settle a case brought by Lynn Szymoniak, a homeowner who was featured on CBS’ “60 Minutes” last year for uncovering details about banks’ so-called robo-signing of foreclosure documents. Szymoniak will get $18 million from the settlement.”
Most people don’t know Lynn Symoniak, but the banks certainly do. And so should you. If you want to know how the foreclosure fraud scandal was uncovered, she is a key figure. I first encountered her work in 2009, when I was a naive bewildered staffer working on policy issues I didn’t quite understand with enthusiasm and adrenaline that could partially make up for the ignorance.
In 2009, I was a Congressional staffer focused on the complex awkward mash note to regulators that eventually became known as Dodd-Frank. The financial crisis was in full effect, with hearings that for all intents and purposes were held with caps locks enabled. Every week was a new scandal or systemic risk, from AIG bonuses to multi-trillion dollar Fed balance sheet expansions. I didn’t know a lot about how banking regulations interacted with the real economy at the time, but then, it didn’t seem like that was the main criteria for working on the Financial Services Committee. The committee was not set up to do good policy, it was designed explicitly as a fundraising mechanism for new members of Congress. The ignorance of those on the committee was remarkable, to which anyone watching hearings at the time could attest. Rep. Brad Miller, who is a real legislator and a geek on mortgage issues, has said that he had to look up the meaning of credit default swap on Wikipedia in 2008. That’s the level of information we’re talking about. To be fair, the world at large didn’t know much about the true nature of the financial system, and frankly, neither did many people inside the big banks.
But still, this was a committee in Congress charged with oversight of the capital markets, so it was confusing that there seemed to be a lack of basic knowledge of how the system worked. Actually, that’s not quite right – many staffers and members on the committee had a wide and deep well of financial expertise, but it was built on faulty assumptions about credit. The cocoon of lobbyists had created an environment inevitably built on groupthink, on the idea that the big banks were somehow good for society. Staffers had to increasingly ignore the suffering of homeowners and mounds of data on income inequality in order to believe this. This is not so hard to do in DC, there is a lot of money and infrastructure invested in ignorance. Applied ignorance, however, has a psychological side affect. In order to believe that your bad harmful decisions do not invalidate you as a human being, a wonderful sense of aggressive ignorance had to be paired with an almost artistic level of privileged self-pity.
One story should suffice to describe this attitude. A staffer once turned to me after a hearing that ran late and actually said, in typical Capitol Hill asshole fashion, “our job is so hard”. I looked at his plushy chair and the enormously fun and interesting subject matter before us, and momentarily enjoyed the hatred I felt for him. That was the attitude. Self-pity mixed with ignorance and privilege. My guess is that he’s now working for some trade association for predatory lenders talking about the need for creative credit products to serve under-banked communities, and making an enormous amount in the process. Now, this does not apply to everyone – there are spectacularly brilliant morally upstanding people there, and they are the reason that policy success happens, when it does. But that was/is the general vibe.
This is the environment of policy-making that someone like Lynn had to penetrate. I would naturally have wanted to work with her, and eventually did – but I was at the time looking at her from the other side of the funhouse mirror. In the spring, I got a weird email from a Puerto Rican realtor in Orlando. It was the kind of message you’d get from a Nigerian spammer, with an attached that purported to show “MILLIONS OF FORGERIES ALL OVER THE COURTS”. It was a time of intense claims, a kind of cultural transition where a billion dollars began to seem like chump change, and a trillion dollars was worth paying attention to. I spent some time looking into this email, probably violating house policy on opening attachments from people I didn’t know (the Chinese attempt thousands of hacking attempts on the Capitol every day, apparently, which means they have access to a supremely boring picture of the increasingly irrelevant legislative process).
Attached was a document that was quietly going around foreclosure-related circles, showing obvious forgeries on documents put together by banks, documents necessary to foreclose on the millions of Americans lucky enough to participate in the great housing bubble party of 2002-2008. Of course, like a good Capitol Hill staffer receiving an incredibly important piece of evidence on a multi-trillion dollar scandal, I was like “this guy is crazy” and quickly got back to working on regulatory reform and surfing the internet. (Unofficial motto of Dodd-Frank: Hey, um, regulators, why don’t you make all the rules and we’ll check out Twitter? Mkay. Also your budget is cut!) I returned to the topic a year later, tricked by the funhouse mirror into believing that the foreclosure fraud scandal wasn’t, couldn’t possibly be the real thread tugging at our economic foundations.
While Dodd-Frank passed in 2010, most of the action in 2009 was on the House side. Then in 2010, the Senate took it up, and we could move on to other issues. Near the middle of 2010, I encountered that strange document again. Over the course of that year, I had developed a set of contacts with bloggers and ex-regulators who had helped on various pieces of Dodd-Frank, and they started letting me know of forgeries and fraud in the foreclosure process. The real problem I had was connecting that directly to the capital markets. A few reports starting coming out about foreclosure fraud, with the real kickoff a Gretchen Morgenson column in the summer. Yves Smith of Naked Capitalism began describing strange legal theories around securitization and foreclosures. One day, it clicked. Holy shit foreclosures are where the financial system meets the real economy, and the bank servicers are chewing through our entire housing stock.
Meanwhile, that strange set of documents kept resurfacing. And those documents, which showed obvious forgeries side by side with easy to comprehend descriptions, turned out to be pivotal evidence. Rep. Grayson used them in a speech on MERS in Sept, 2010. Lynn Symoniak was the person who put them together. She had been waging a frustrating, agonizing, multi-year fight against banks who had been lying and deceiving millions of people around the housing market. Some of the staffers who had been working on banking began to work internally on generating hearings to pressure regulators, and there were a slew of hearings in late 2010.
Wells Fargo executives came in for a briefing at that time, and told staffers that they were the good bank, the Warren Buffett owned bank. They didn’t dare robosign. Of course I had seven robosigned affidavits in my inbox by Wells, courtesy of among others Lynn. I ended up yelling at those executives and calling them out as liars, though it didn’t matter because the writing was on the wall for the 2010 elections. Man that was a lonely briefing, as everyone else seemed to be looking to get a job with Wells (the banking staffer of the Congressman who fought against the Fed audit is now the head lobbyist for Wells, incidentally). That loneliness, that social isolation, really gets to you. I know at times, it’s gotten to every single person fighting the banks. And they know it, and use it.
But the fight went on, despite the onrushing bloodbath of an election. We used Lynn’s documents to prepare for aggressive hearings under housing subcommittee chair Rep. Maxine Waters, and the expertise generated by the lawyers in the fight and people like Lynn to drive this issue to the regulators. Lynn continued to fight as aggressively as anyone I’ve seen, using media platforms like 60 Minutes and every political and policy connection should could make to drive this massive fraud into the public arena so it could be addressed. I’m guessing that untold numbers of lawyers, law enforcement officials, homeowners, policymakers, regulators, bankers, and homeowners have made use of her work, for better or worse. And she has paid the price for it.
Going up against the banks is not easy. What these banks do to ensure that their opponents (their real opponents, not the pliant risk-averse operations like the Center for Responsible Lending) are weak is starve them of funds, over-lawyer them, smear them with PR, and basically do anything they can to ensure that it is painful, lonely, agonizing, and horrible to stand up for your rights and the rights of others. Another one of these heroic figures, Lisa Epstein, was smeared in a juvenile report put out by the Florida Inspector General back in January. Florida attorneys June Clarkson and Theresa Edwards were fired by Attorney General Pam Bondi, and their reputations savaged. There’s a lot more to the story, of course. It’s just a very narrow slice of what I saw.
I don’t particularly like the settlement. First of all it’s complex, thus it presents a natural territorial advantage for those with many lawyers. Second of all, it doesn’t address one of the root problems, which is that bank servicers cannot actually do their jobs properly because they haven’t invested in either the people or the personnel to do it. And there are many more problems, of course.
That said, a small group of people really can change the world. Lynn did so. I was privileged enough to witness her integrity and competence. That she will no longer be financially persecuted, that she will have succeeded in doing well by doing good, means something. It’s not help for homeowners, it’s not jail for those who ordered fraud and forgery, it’s not the pink slip that oh so many regulators should get. But it’s meaningful. There’s a reason the side that commits fraud overfunds its people, provides support for them, and makes sure they are given prestigious positions and plum jobs. It works, it means they win. But for once, one of ours won the ability to go about her life, free from the constraints of having big enemies and no money. This isn’t the biggest deal in the world. But tt means that those who fought the good fight, can keep fighting. That’s not nothing.