We asked readers to sign a letter to Iowa attorney general Tom Miller, who is leading the 50 state probe into foreclosure and mortgage abuses. Here is the official report from National People’s Action, which was part of the group that met with Miller earlier today:
Leader of 50 State Foreclosure Probe Tells Struggling Homeowners: “We Will Put People in Jail”
Iowa’s Attorney General Miller also agreed that principal reductions, loan modifications, and compensation for defrauded homeowners are all on his agenda
The lead Attorney General in the 50-state foreclosure investigation, Iowa’s Tom Miller, told homeowners at risk of foreclosure today that he supports a settlement with the big banks that requires significant principal rate reductions, loan modifications, compensation for citizens defrauded of their homes, and criminal prosecutions against big bank executives who broke the law.
“We will put people in jail,” Miller said, in response to questioning. “One of the main tools needs to be principal reductions, just like in the farm crisis in the 1980s…There should be some kind of compensation system for people who have been harmed…And the foreclosure process should stop while loan modifications begin. To have a race between foreclosures and modifications to see which happens first is insane.”
Attorney General Tom Miller met Tuesday with more than 100 people from 15 states representing community, faith, and labor organizations, foreclosure victims and struggling homeowners from across the country. Participants urged Tom Miller to make a strong settlement that includes loan modification and principal reduction as the primary tools for cleaning up the mortgage mess created by the banks.
Miller also agreed to continue to work with grassroots community, faith, and labor groups from across the country and agreed that the Bank Accountability Campaign’s members are stakeholders who deserve a seat at the table.
“We are very pleased with how this meeting turned out and now our expectations are higher than ever,” said Deacon Mike McCarthy, an Iowa Citizens for Community Improvement (Iowa CCI) member from Des Moines, IA.
“Attorney General Miller made it clear that he sees this investigation as a chance to clean up the foreclosure crisis that has ransacked our communities for over three years now and continues to push down housing values for everyone. He stated that loan modifications will be a core component in any settlement,” said Gina Gates, a foreclosure victim with PACT-PICO in San Jose, California.
“The stakes are high. A strong settlement is the best hope to hold Wall Street banks accountable and prevent millions more Americans from losing their homes,” said Mikael Broadway, from IAF in North Carolina.
“The big banks have repeatedly weakened efforts to get to the root of the foreclosure crisis,” said Shirley Broomfield, a struggling homeowner from Melbourne, Florida who is working two jobs to pay her mortgage. “They’ve failed to live up to their promises and outright ignored the rules of the game, with little to no consequences. The Attorneys General have a chance to change this.”
This is the first of a series of similar meetings with the state Attorneys General who are on the investigation’s executive committee. Participants in the meeting included borrowers who have lost their homes unjustly, other homeowners in danger of foreclosure, clergy and community advocates from 15 states – including Iowa, California, Illinois, Washington, New York, Colorado, Ohio, North Carolina, Florida, Missouri, Massachusetts, Kansas, Michigan, Montana and Oregon. The participants presented a stack of homeowner testimonies to Mr. Miller and made it clear that this investigation is their best hope for resetting the housing market and helping millions avoid foreclosure.
The group is staging protests this afternoon at the Wells Fargo Home Mortgage headquarters in West Des Moines and at branch of Bank of America in Des Moines to highlight the massive bonuses that bank executives will receive this month while millions of homeowners face foreclosure. They plan to lift up a new report showing that restoring equity to underwater homeowners would cost the big banks $73 billion, approximately one-half this year’s bonus & compensation pool. Similar protests will take place this week in New York and California.
The growing activity from homeowner groups comes amidst a turbulent time for big banks, especially Bank of America, with both investor lawsuits and the Attorneys General investigation pending, and some analysts beginning to predict the eventual need to restructure America’s largest bank in 2011.
The meeting with AG Miller and other events this week are organized by PICO National Network, National People’s Action, SEIU, Alliance of Californians for Community Empowerment, Alliance for a Just Society, and IAF Southeast.
Yves here. This is certainly good news, since the public can hold Miller’s feet to the fire if he fails to live up to these commitments. One concern I have is that the standard for fraud under the law, as opposed to from a common-sense perspective, is stringent, which means it is extremely difficult to prove. Remember Joe Cassano of AIG, the head of AIG’s financial products group? An investigation of him did not lead to prosecution, effectively because he has discussed what he was up to with AIG’s accountants. Fraud, as defined under the law, requires intent. So perversely, “I thought this was kosher” will get you out of a fraud charge.
We have a short form discussion in ECONNED as to how various laws and regulations were weakened over the 1990s to make it very difficult to prosecute financial fraud successfully. You can find a full treatment in Frank Partnoy’s book Infectious Greed.