Gretchen Morgenson Confirms Lack of Attorney General Investigations into Foreclosure Fraud

This is the key snippet from Gretchen Morgenson’s New York Times column today, which inveighs against Iowa attorney general Tom Miller’s unseemly and peculiar haste to get a deal with miscreant banks inked:

Two people who have been briefed on the discussions, but who asked for anonymity because the deal was not final, told me last week that no witnesses had been interviewed and that the coalition had sent out just one request for documents — and it has not yet been answered.

And the official denial amounts to a confirmation:

Mr. Miller declined to be interviewed about the proposal. But Geoff Greenwood, his spokesman, disputed the notion that the attorneys general have done no investigation. “We have dealt with this issue for some three and a half years on a day-to-day, front-line basis with consumers,” he said. “We know what the problems are, and we know what needs to change.”

Really? All you have is complaints to various AG offices, which I sincerely doubt have been investigated in a systematic manner. If they had been, we would have seen more wideranging action in more states by now. But all they have is accounts from irate homeowners, along with court cases and horror stories reported in the media. That’s self-reported sample, regularly dismissed by the banks as anecdotal and not consequential.

Without an investigation, all we have is “he said, she said.” Despite robo-signing having revealed widespread abuse of court procedures, the AGs seem remarkably unwilling to get to the bottom of things. Since the banks are the ones who have a seat at a table in these negotiations, it’s almost a certainty that their version of the story will get more serious consideration.

If the attorneys general had such a such a good overview prior to the eruption of the robo-signing scandal, why did New York state banking commissioner Richard Neiman implement regulation last October to make clear that New York’s business conduct rules for servicers also covered ones exempt from registering with the state (such as ones regulated by the Office of the Comptroller of the Currency)? As Neiman stressed in a letter to the editor of the Washington Post:

With the numerous bank errors that took place in the five months that Dana Milbank tried to refinance his home [“Foreclosures: Big banks’ reign of error,” Sunday Opinion, March 6], you could almost laugh that a prominent mortgage servicer happened to pick a nationally recognized columnist to harass. But it is not funny.

Bank regulators across the country hear the same story over and over again. In New York we took the unprecedented step of promulgating regulations to govern mortgage servicers’ treatment of homeowners. Now, we can fully examine servicer activities, use the power of law to enforce our rules and require timely responses for homeowners.

We need national standards to govern mortgage servicer conduct now. The Consumer Financial Protection Bureau should put in place such rules as an early priority. For every columnist affected, tens of thousands of people are suffering who do not have an outlet on the opinion pages to voice their frustration. They do not find it funny, either.

The fact that it takes a letter from a non-deadbeat educated person to get the chattering classes to take mortgage abuses a tad more seriously proves that the officialdom has been, and for the most part, continues to be, willfully blind to the extent of the rot.

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  1. mcgee

    Ahhh America. You don’t become the Attorney General without being a board certified member of the establishment. Consider the paradigm shift post Citizen United decision and the realization of further advancement up either the political ladder or corporate ladder requires keeping the holders of wealth and power happy.

    All the Boy Scouts left the arena a few years ago. What’s left aren’t worrying about the indebted little folk. Not unless they band together and hire a lobbyist with some fat campaign checks. Which is an impossibility.

    1. Tom Crowl

      “…unless they band together and hire a lobbyist with some fat campaign checks. Which is an impossibility.”

      It’s not an impossibility at all. However the believe that it is makes things extremely difficult.,, and is great support to the status quo.

      Remedy is found in understanding the power of LARGE numbers and SMALL money! And embracing the needed model for enabling that.

      Its about drastically reducing and simplifying even the smallest ‘political’ contribution and facilitating the networking of those interested in making similar contributions.

      Frankly, while I’m thoroughly disgusted with both parties and our quality of governance in general, at some point its necessary to place a bit of blame on an electorate that does nothing PRACTICAL about it… nor make demand on their politicians for implementation of remedies.

      For simple illustration of the principal:

      Some round figures: $25 times 150 million voters is $3,750,000,000.

      That would be all of 50 cents a week (giving you even a couple of weeks off for holidays!)

      Now I’m not suggesting that it would work exactly that way… but I am suggesting there’s a whole lot more potential there if it can be tapped… if it can be made easy enough that it becomes part of your regular life…

      I believe that CAN and MUST happen.

      And I believe the key is by understanding that certain transactions must NOT be inhibited by added charges.

      I look forward to having the opportunity to talk about this somewhere eventually. The back office software is done, demo has been up for over two-years, and patent has just been issued. I’ve yet to have the opportunity to pitch anywhere and look forward to the chance.

      Addressing Two Problems:

      1. Simplifying the process: “…[campaign contribution] could become much easier if campaigns can figure out how to allow people to donate by making the process easier through one click pay methods and a short form for the additional FEC information required.” – Katie Harbath, chief digital strategist at the National Republican Senatorial Committee… now with Facebook

      2. The need for a viable tool for voter response to the Citizens United Decision and broadening the citizen’s capability for participation in general (a hot topic).


      The Commons-dedicated Account & Network

      From user’s perspective it’s similar to Facebook credits or X-box points except for dedication to Commons-oriented functions instead of games, etc. …and further distinguished by not adding to or drawing from transaction costs which is an essential* requirement … as well as supplemented by certain intra-system networking capabilities and mechanisms for realtime display of contribution activity.

      Finding Roots in a Shifting Landscape: Facebook and the Future of Social Networks

      Political Fundraising: Act Blue, Facebook and the Missing Network Imperative

      1. mcgee

        Completely agree that would be a workable solution. Now get it implemented. I’ll check back in a decade.

        President Obama had the largest small donor base in the history of election finance. What difference did that make looking back over the past two years?

        I voted for the President after falling for Brand Obama.

        1. nonclassical

          As M. Ganz, Obama grassroots organizer in charge stated in “The Nation” interview recently, Obama jetisoned his grassroots support after campaign to do the real governance..(corporate=DLC+Rahm and co.)

      2. nonclassical


        truth is, corporate media is solving the problem by disinforming the public-unions and state workers caused it all…

  2. Mark P.

    Sadly, mcgee (above) is right.

    Still, Yves likely has some idea from dealing with the MSM over the last couple of years how hard it’s become for journalists like Gretchen Morgenson to do what they were once actually expected to do.

    So, accentuating the positive, I’m slightly heartened that Morgenson has the fortitude to do what she’s done here, however mildly — and at the Grey Lady, which has increasingly become the American Pravda.

  3. Jack Rip

    It is difficult to overstate the amount of damage caused to this country, and its residents, by the rain of negligence terror taking place under Obama’s ‘let’s side with business and let’s ignore labor, foreclosures and anything pertaining to the middle class.’ (The poor are long dead for the Democrats.)

    While 100,000 workers protest in Wisconsin, Hosni Obama stays mum in his palace. That’s downright corruption (only reelection matters), negligibility, shortsightedness, small mindedness and highest degree of dysfunction.

    1. wc4d

      And you’re expecting W would have known what to do? Much as I dislike Obama’s allowing this all to get swept under the federal rug, I have no doubt, given what we’ve seen of the new Republican majority in the House, that replacing him with the likes of Romney, much less a Huckabee, Gingrich, Daniels, or the ghods forbid, Palin, would only serve to finish turning our lives and land over to the oligarchy. Don’t ever forget how easy it now is for the Koch brothers and other kindred souls to legitimately scare Obama or any other Dem leader away from anything they might disagree with, just by waving a checkbook at a Scott Walker or Scott Brown.

    2. nonclassical


      totally accurate-and, Obama is about to devolve Social Security come budget time, in a Scott Walker move, having given away Bushit tax breaks already, having also frozen federal worker pay..

      Russel Feingold, 2012..

  4. john

    And Tyler Cowen thinks liberals are too credulous about the effects of money on politics:

    A political solution to an economic crime, which is what the AGs propose, will sustain Tyler’s illusion because once again it will prevent the accumulation of evidence required to prove the specific nature of the corruption. If you do not document crimes it does not mean they do not exist. In all probability it simply proves that the criminals are more powerful politically than their victims.

  5. kravitz

    are attorneys general required to divulge what banks they hold interests in? could it be they’re not exactly protecting TBTFs….rather, their own portfolios?

  6. Race Bannon

    A novice who approaches the court system is going to be appalled, stunned and of course, enlightened. It’s about money and grinding the other son of a bitch down, unlikely any serf who is moving his shit into storage has the capacity to deal with this type of thing. It’s one of those moments where the sheer perversity of the system washes over someone like a wave of horror. The US leads the world in locking people up, we lead the world in violence, the press leads the world in pretending that elites are going to help the poor. Here’s Gretchen: “My word, the system that’s supposed to do A and B isn’t doing it. Oh woe!”
    Maybe if Gretchen was losing her bedroom her writing would actually address the seething conflicts of interest, write about mobsters that live in her state, and actually shake something up instead of writing shit to be enjoyed on a liberal Sunday morning. Pathetic, and rightly so!

    1. Doug Terpstra

      We will begin to see the tide turn only when this predatory malfeasance begins to feed on the upper castes—as with Dana Milbank and Arizona’s Republican State Senator Susan Reagan. This is inevitable as the ranks of middle-class prey are increasingly thinned.

      1. nonclassical


        having blamed teachers for educational “opportunity” (students go to gain economic opportunity), having blamed
        teacher’s unions for economic disaster at state level, having blamed-scapegoated teacher’s pensions for economic
        hardship at state level, fundamentalists will now blame
        the educated who are pushing back, for being “the enemy elite”..of said fundamentalists…(and they’ll buy that version of what’s the matter with Kansas too..)

        1. Skippy

          Arizona is like watching a fundamentalist stew, w/herbs and spices gathered from all over, reduce.

  7. Schofield

    Corruption has become a predominant lifestyle in Anglo-American economies. Unfortunately only a great cleansing will now uproot it.

  8. Recon3e3

    What sucks in this “settlement” is for every sanction against a bank, it appears to give the banks an out.

    What is of concern is the fact that there has not been a central source for consumer complaints to be investigated. This is an investigation? Give me a break, this is just trying to look good in a quick settlement. Each AG takes in complaints, they write a letter to the bank. That is about it, end of that states AG investigation. The friggin banks are laughing at the AG’s as they will just write a response and say we are doing our best and we are complying with law. Yea, big help to the consumers. If the AG’s would then have authority to sue for the consumers the banks would then take them seriously.

    What about taking these complaints from the individual AG’s and compile them? Why not give the AG’s authority to take actual action instead of saying we can’t do anything?

    Depositions? Hearings with consumers giving testimony?
    Making the banks do something and not just lip service.

    Why doesn’t the proposed settlement require the banks to adjust all credit reports of delinquency to a positive if found the bank caused the delinquencies by the banks actions. Many in statements have shown the banks as a matter of policy and instruction that consumers were not to make payments during the modification process. They then show them delinquent. They show them delinquent if they made the payments in trial periods, because it wasn’t the full payment from the original loan. They may put people through the modification process several (as many as 8) times or several trial payment plans. Each time then denying the modification and all the time reporting negative to the credit agencies. THIS SHOULD BE PART OF ANY SETTLEMENT, MAKING THE BANKS CORRECT ALL OF THOSE DELINQUENCIES AND SHOW POSITIVE TO FIX CREDIT SCORES.

    Unless the AG’s show that they are serious and the banks are not just going to get a slap on the hand. Until the banks are required to do qualitative things for the consumers. Until the banks are not just going to be allowed to do more than anything but give lip service. Until the banks know they have to settle or face even more consequences. Until the banks know that once a settlement is reached they cannot go back to what they have been doing without any consequence.

    Once a settlement is agreed on by the banks and doesn’t give them outs. Then the banks are going to give lip service how seriously they take this and want to do the right thing. They are going to cry they have been hurt and need help, and all the time in the board rooms laugh and laugh and laugh at the AG’s, knowing they got out of a settlement or regulations with impunity

  9. Doug Terpstra

    Richard Neiman: “We need national standards to govern mortgage servicer conduct now. The Consumer Financial Protection Bureau should put in place such rules as an early priority.”

    Well now, what an uncanny coincidence that is! From Yves’s post on March 8, 2011, AG Miller is “reportedly jockeying to become the first head of the Consumer Financial Protection Bureau.” How convenient, a full circle, all tied up with a very neat bow.

    1. ScottS

      That was my first thought. Here’s how they will trample state real estate laws and codify MERS into law, through CFPB.

  10. nyt reader

    As I read it, I wondered where Gretchen got her story. It wouldn’t have been dropped in her lap by the NY AG and his people by any chance…?

  11. nonclassical

    Gretchen has let out a few zingers over the years;

    In August, 2004 she named Goldman-Sachs, selling off 1/3 of their world market share 13.8% of “oil futures”. Seems investment banks had been selling said futures back and forth to one another to drive the price. Other banks blinked, but Goldman stated they would be buying back in, in blended fuels or biodiesel. But instead, in September, 2004, Goldman sold off another 1/3, setting off stampede of those afraid Goldman was manipulating the market the “other way”. Prices came down from over $4.00 per gallon to just over $2.00, just in time for November, 2004 Bush reelection..

    Gretchen is good..

  12. Donna

    It should be a battle for all of people against the banksters.


    1. Break up “too big to fail” banks
    2. Criminal investigation and prosecution to deter future offenses.

    If the 50 AGs can set to achieve the goal, the rest of financial settlement will be much easier to negotiate.

    Let me remind everyone that AG Tom Miller was the lead negotiator in 1998 tobacco master settlement. He was able to settle $206 billion on behalf of 46 states against 4 major tobacco companies over a $1.23 pack of cigarette. The settlement drastically changed how to tobacco industry run its business.

    Now, in dealing with the banking industry, AG Tom Miller hasn’t demonstrated its leadership and $20 billion dollar settlement proposal is absurd. $206 billion dollars settlement in 1998 plus 15 years of inflation certainly doesn’t translate it into $20 billion dollars.

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