Dylan Ratigan: To Eric Holder – A Simple Way To Prosecute Bank Crimes

By Dylan Ratigan, MSNBC host and author of the new book Greedy Bastards. Cross posted from DylanRatigan.com

Shahien Nasiripour has a great scoop in the FT – bank regulators have uncovered up to 5000 military families who were foreclosed on illegally by mortgage servicers. Foreclosures on active duty troops is usually a big no-no, for a lot of reasons – for instance, when your credit rating is damaged by a foreclosure, it can impact your national security clearance. In addition, there’s enormous stress that the soldier goes through when his or her family is facing a threat of eviction, and it’s the kind of stress that makes him or her less equipped to be ready in a warzone. Congressman Bob Filner has even accused banks of “homicide” against American troops, blaming the banks for suicides resulting from the increased stress brought on by aggressive debt collection techniques.

There have been laws to protect troops from unscrupulous lending practices going all the way back to the First World War. The most recent revision to these laws is the Servicemember Civil Relief Act, which was signed in 2003. Congressman Brad Miller, who helped author the most recent version of this law, explained the rationale for the law as follows:

The Service Members Civil Relief Act is very clear: if you’re in harm’s way in our nation’s military, you can devote your whole energy to our nation’s service without worrying what’s happening in a courthouse back home. And if you have a claim against someone in our military, you can wait until they get home and can defend themselves.

Miller is a Democrat from North Carolina, but the bill was signed by George W. Bush, so there’s a bipartisan consensus on not foreclosing on troops fighting in wars.

Yet, as the FT story shows, it has become clear that big banks are routinely ignoring the law. Miller noted,

The SCRA is not some obscure legal technicality that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks, but they’re huge and specialized. Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required, and consciously decided that they could just ignore it, the same way they apparently decided it was okay to file false affidavits in legal proceedings.

In all likelihood, these banks simply never set up their management processes to handle anything but an aggressive foreclosure steam-roller. And so, they are breaking the law.

Banks admit this. JP Morgan apologized back in February in a Congressional hearing for overcharging 4000 military families and illegally foreclosing on 18 of them. In that hearing, one foreclosure defense attorney pointed out that jail time for officials of the bank doing the foreclosing would be a deterrent to these practices, an apology would not be.

Much has been made of President Obama’s argument that the banks did nothing illegally, and various other scholars and officials have argued that prosecuting the banks is far too expensive and difficult. Yet, the SCRA is a simple law with teeth; it carries real jail time, and the parties have already confessed to the crime. Here’s Section 303(d)(1) of that law, which spells out penalties. (PDF)

(1) MISDEMEANOR.—A person who knowingly makes or causes to be made a sale, foreclosure, or seizure of property that is prohibited by subsection (c), or who knowingly attempts to do so, shall be fined as provided in title 18, United States Code, or imprisoned for not more than one year, or both.

Interestingly, the Department of Justice seems to agree with this interpretation. Here’s a press release from the Department of Justice on a settlement of some of these claims, from Bank of America. I’ve bolded the important part.

The Justice Department announced today that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).

Note the use of the word “alleged.” Bank of America isn’t admitting anything, and the Eric Holder’s Department of Justice isn’t making them admit anything. Otherwise, the penalties might come into play. Sometimes, law can get very complex. But sometimes, it isn’t. JP Morgan admitted to violating the law. There are up to 5000 more cases, and each one carries up to a year in jail.

Eric Holder and various US Attorneys around the country aren’t prosecuting bank foreclosures on active duty troops, even though they know it is happening. Bank regulators know about the problem. Congress knows about the problem. Certainly, the Pentagon knows about the problem. Where are the prosecutions? Is there an internal policy that certain crimes are not to be prosecuted? Isn’t that something the public should be aware of?

As Congressman Miller put it, “The continued failure to pursue criminal charges in the face of flagrant violations of the criminal law is destroying Americans’ faith in their government and democracy. In a democracy, no one is too big to prosecute.”

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  1. leapfrog

    “Is there an internal policy that certain crimes are not to be prosecuted?”

    Sure seems that way. If it does exist send it to Greg Palast – so we will all eventually see it.

    I’m so sick of the Place Holder administration. When I saw on the Covington & Burling website that the firm defends white collar criminals, I knew right then that Place Holder would NEVER prosecute a TBTF white collar criminal. Wasn’t Covington & Burling also the firm that “vetted” MERS?

      1. Procopius

        I don’t hve a link for it, but I remember reading a couple of years ago that it’s because Geithner, who everybody recognizes is his boss’s fair-haired boy, has put out the word, “Protect the banks above all else.”

    1. Campbeln

      Ok, look here! Banks are esteemed institutions rooted in the community! No institution of this stature would ever *KNOWINGLY* make a mistake such as this, especially not to our brave servicemen and women! [shakes head in disgust at your naivete]

      But institutions are made up of people and people make mistakes. It’s clear that they *MEANT* to follow the law, but along the way someones innocent mistake caused a few non-standard records to be mishandled. The institutions have been informed of these minor transgressions and are really very sorry that they occurred (I was told as much on the golf course last weekend). Further, we have assurances that these institutions have committed to training their employees to help avoid this issue in the future.

      We have every assurance that they will valiantly endeavor to ensure that this situation does not occur again, what more could a *REASONABLE* person possibly ask?


      Personally, this is how I believe the low-level “Outer-Party” (to use the 1984-ism) individuals are brought into line of what the “Inner-Party” requires of them. Just a bit of a wink and a nod to get the underlings to have just enough cognitive dissidence to grind the Proles to dust with nary a second thought.

      Well, off to my Two Minutes Hate!

  2. bob

    Is the military helping these guys?

    One of the reasons that service members are so “credit worthy” is that Uncle Sam takes non-payment of debts very seriously. Private Pyle in over his head? Go to his CO, Uncle Sam will pay the bill, out of his paycheck. No trial, or appeal.

    1. PL

      By alienating military types with wrongful foreclosures, banks are giving the right wing good reason to unite with the left wing faster than you can say OWS.

      1. shekissesfrogs

        DoD are cutting GI Higher Education benefits and want to cut their medical bennies too.
        Wedge issues are the politicians way of splitting us bu the degeneration of the political class will work in our favor ultimately.

      1. Procopius

        The outsourcing goes back to Reagan, but you’re right, the outsourcing of actual combat missions started under Rumsfeld. The funny thing is, it actually costs the government a lot more to have contractors doing these jobs. The difference doesn’t go to the workers, of course, but is the overhead and higher salaries for the owners of the contracting companies. It’s really scary to look at how many non-government people are involved in “intelligence” and “security” operations.

    2. avg cityzen

      If banksters know they will not be held accountable, then it’s in their best interest to ignore the law.

  3. Bagbalm

    Perhaps they want a soldier to come home and shoot a banker dead so they can all be labeled potential terrorists.

  4. Brian

    I become more convinced every day that many people are not interested enforcing the rule of law as they are getting in on the so-called action of governmental hand outs and buy outs, regardless of how those funds are produced. One only has to refer themselves to a recent post on this site concerning one Mr. Keen’s supposed solution, and then proceed to review the comment section below as there were some very vocal “posters” that became somewhat aggressive in manner when it was suggested that the rule of law should be enforced–all the while the cheers for handing out a tremendous amount of money was cheered by these same parties (not realizing that Mr. Keen’s solution would recapitalize the same entities they profess to despise).

    1. alex

      Whether or not one likes Keen’s proposal, he is not suggesting anything illegal or ignoring existing law. Failing to prosecute SCRA violations is a whole different matter.

      1. Brian

        I had instructed that one navigate to the recent post on Mr. Keen and THEN proceed to review the comment section below, as I was not referring to Mr. Keen’s view in regards to the rule of law but some of the comments that were presented under said post.

          1. Brian

            Sure. then, refer to response directed at me. I had simply made the claim that the rule of law needs to be upheld and from there I was accused of being a 1%, a hypocrite (not sure why), compared to police that pepper spray non violent people, etc; and when I said stated that the responses were simply emotional and not addressing what I actually said it was I who was said to be the one making accusations.

            In regards to Mr. Keen, I simply responded that his idea wouldn’t work, would have dire consequences, and that we already have a system for clearing bad debt: bankruptcy. I know he addresses bankruptcy, but I think he does so in a rather poor fashion.

          2. tom allen

            Are you referring to Chapter 7 bankruptcy? That used to be very useful for private individuals — believe me, I used it in 2003, and it really helped me turn my life around. Of course, Chapter 7 bankruptcy law was changed radically in 2005, led in part by *drum roll* current VP Joe Biden (D-MBNA), what a surprise.

            From the bankruptcy wiki: “Liquidation under a Chapter 7 filing is the most common form of bankruptcy. Liquidation involves the appointment of a trustee who collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors. Because each state allows for debtors to keep essential property, most Chapter 7 cases are “no asset” cases, meaning that there are not sufficient non-exempt assets to fund a distribution to creditors.[8][9]
            U.S. Bankruptcy law changed dramatically in 2005 with the passage of BAPCPA, which made it more difficult for consumer debtors to file bankruptcy in general and Chapter 7 in particular.”

            I don’t know anything about this group, but here’s one link:

            Here’s one from ABC:

        1. Brian

          Tom Allen,

          Yes, one of the stipulations I had made was that the bankruptcy law changes from ’06 had to be changed and that bankruptcy should be in favor of the debtor, that is, bankruptcy should serve as two mean: (1) to allow a fresh start (and it promotes risk taking among entrepreneurs), and (2) it’s a check against reckless lenders (of course this doesn’t mean that people can’t pay back because they don’t want to). Liberal bankruptcy laws I would argue are necessary for a free market capitalism to work well.

  5. alex

    Exactly what will it take for banks to get prosecuted? If Santa Claus tried this they’d burn him in effigy (or not in effigy) and he’d be labeled a terrorist. In this case I might even agree.

      1. alex

        I thought we had one. Oh, you mean a _real_ Democrat. Sorry, but Harry Truman is dead, and his species is fast becoming extinct.

  6. Markar

    Eric Holder is the biggest do-nothing POS Atty. General this country has had, certainly in my lifetime. His dept. along with all the other captured regulators are looking the other way and letting the clock run out on the biggest crime spree this country has ever seen.
    Traitors, all.

    1. watercarrier4diogenes

      While I’m certainly no admirer of Holder, you might want to consider AGAG, et al as having set up, crippled, or landmined, the DoJ so that any Dem successor would have one helluva time actually getting much done. I think he could have overcome this by direct, assertive action, but I won’t forget who started the mess, ever.

      The BushCo machine left a legacy in the SEC, DoJ, DoD, DHS, and numerous other agencies that is still actively pursuing their agenda.

      1. shekissesfrogs

        You certainly are a water-carrier.
        Holder hasn’t been about to replace anyone installed by Alberto Gonzales?

        The problem is that any replacements are for show and are the cronies of the ones they replace, in fact they recommend them.

        Obama came from Chicago. He swam his way all the way upriver in filthy streams, in record time. HIs past association with mobbed up political fixers and criminals has been ignored.
        But by all means, continue with the fantasy thinking.

  7. jawbone

    CBS Evening News reported very briefly that S&P has downgraded 6 Very Big US banks. Looked to be the TBTF’s among them. The names on screen very briefly.

    From CBS Moneywatch:

    Standard & Poor’s ratings service has cut the ratings of five of the six largest U.S. bank holding companies. Goldman Sachs, Bank of America, Morgan Stanley and Citigroup were downgraded from A to A- and Wells Fargo was cut from AA- to A+. Of the big six, only JPMorgan Chase escaped unscathed.

    The downgrades were part of more than 37 ratings of large global banks reviewed by the agency. Such moves often raise the cost of borrowing for companies, as investors demand a higher interest rate to compensate them for additional risk. (My emphasis)

  8. Westcoastliberal

    The big banksters don’t care about the silly penalties; hell I’ve got a case right now where the payment was off by almost $400 a month; originator “forgot” to include part of the taxes, then the servicer (Chase) violated RESPA and TILA. Not even a slap on the wrist. Little people in the 99% in this country are lewdly screwed.

  9. bear_in_mind

    Eric Holder seems to have the zeal of a pygmy banana slug. Can anyone rattle off a list of cases Eric Holder has prosecuted since becoming AG? Will I need fingers on more than one hand?!

  10. disgusted liberal

    Holder is exhibit #1 on why Obama doesn’t deserve another term. Either Holder is incompetent or willfully ignoring criminality.

    Liberals have to get over this hang-up that any Democrat is better than losing an election. Disgusting.

  11. tz

    As I said to the links, the problem is that servicemen THEMSELVES have no power to enforce the law. If upon filing of foreclosure documents, if in a few days days the serviceman could respond and shut it down completely, and if it didn’t stop they could sue for 150% of the value of the mortgage or maybe more, lets go 300%, banks would think twice about unleashing steamrollers.

    Instead, the only power to initiate this is benevolent bureauctats. The law may have teeth, but the dog won’t even growl. They are bought off.

    I’m a rule of law libertarian that thinks fraud is something that victims should be empowered (as well as the government) to avenge with punitive damages.

    But somehow the status quo is more progressive than the serviceman upon filing a suit getting enough for the lawyer, a good chunk of cash, and enough to pay off the original mortgage or find a new, better house.

    The banks had the law written as it is becai=use although the law has teeth, the branch that has to enforce it has been defanged

  12. psychohistorian

    Thanks for the posting.

    Just another chapter in the fall of the American Empire. If history is written by the winners, there are going to be a lot of Winston Smiths very busy in the coming years.

  13. Glen

    Does Holdner actually DO ANYTHING?

    Seems like he’s had a TARGET RICH ENVIRONMENT for the last three years with all this fraud and corruption and about all I read him doing is selling automatic weapons to Mexican drug gangs in a sting operation that’s probably killed more people than he’s arrested.

    Maybe his foot fits perfectly under that short leg on the Cabinet table so the drinks don’t spill when they have a Cabinet meeting.

    1. Francois T

      Holder reminds me a Wally in Dilbert:” Every week, I reach ever higher levels of unverifiable productivity”

  14. Francois T

    I’ve been following politics for at least 40 years. I have to admit that very very few people have trigger in me the irrepressible feeling of nausea that Eric “Place” Holder elicit every time I even just read his name.

    It goes without saying that no sad caricatures of a “public” servant like EH could survive more than a year if we were still a real democracy where the press and media do the job they’re supposed to do, a.k.a. speak truth to power and ask the harsh questions.

    Alas, we have the country we deserve by refusing to vote.

  15. Francois T

    You’re one of the few, the proud…a real journalist!

    Alas, you’re talking to Slick Eric, the morphoid jellyfish devoid of any spine, the dude for whom compromise is a way of life, just like his boss, Brotha Obysmal.

    Yes, much has been said about O saying banks did nothing illegal. It’s just so that Obama doesn’t care if they did or not; he wants to be re-elected, period, end of the goddamn story. He’s even ready and willing to accept any vapid and morally depraved tripe coming from the banksters; one so illogical as to insult any intelligent being, like, for instance, “if we foreclose as fast as possible (please don’t fill up your head with the details, you’re so busy anyway) then the economy will restart faster, since it is well known that as housing goes, so does the economy. Ain’t we da shit Barrack?. It’s all gravy for ya, know wattam sayin’?”

    And here you come Dylan, with a rational and logical solution.

    Not a chance!

    1. William C

      Grateful for enlightenment from someone. Did Obama really say the banks did nothing illegal? I seem to remember seeing him say that a lot of what they did was legal, which of course is very different. Or is my memory letting me down?

  16. Rowlf

    As I mentioned in another thread, I was surprised when a family member serving in Afghanistan as an officer mentioned his approval of the OWS protesters. Most of the military is of the OWS age and class group, and tend to take the Constitution and rules seriously.

  17. ericmcsquare

    In all the states that I worked in (PA & NJ) a certificate of non-military service signed by the foreclosure attorney is required to obtain judgment and move to sell the house.

    The firms I worked at use the following website to determine active duty status


    However, this website has one fatal flaw. It only requires a name and a birthday to spit out a statement saying the individual was not on active military duty.

    For fun you can see how easy it is to obtain the official looking statement from the above website; just put in the name David Petraeus and any birthday other than one in November 1952 and you will receive a statement that upon the information submitted David Petraeus is not on active duty.

    After another incident that was unrelated to non-military status, I refused to sign non-military certs that were not obtained using a SSN, however, I know just about every other FC attorney I came in contact with had no problem signing them.

    The Department of Defense needs to make a change immediately and start requiring SSNs, otherwise, this process will just repeat itself.

  18. skinla

    Holder won’t do a thing and neither would Obama because both of them are corrupt poodles for the bankers. I say, LET MILITARY TAKE CARE of this issue.

    Senate just passed a nasty provision buried in the annual defense appropriations bill that would give the President the power to use the military to intern anyone – including American citizens – indefinitely, and hold them without charges or trial, anywhere in the world, including on American soil. The only good use of this nasty provision would be to arrest these crooks (BANK EXECUTIVES) and hand them over to military to be tortured for ever without trial in some far away prisons like Guantanamo, Abu Garib and Bagram.




    1. Francois T

      That S.1867 of the NDAA could ever had one good use tells me a lot about the extreme state of decay this country is in.

      I can’t argue with your idea tough.

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