While quite a few bloggers, prosecutors, economists, and other experts have taken the Administration to task on mortgage-related abuses, the mainstream media for the most part has not seriously challenged the mind-numbing Obama claim that the banksters did nothing illegal.
Reuters refreshingly opposed that
bullshit assertion frontally yesterday. In a piece pointedly titled, “The Watchdogs That Didn’t Bark,” reporter Scot Paltrow shows that the mortgage arena is a target-rich environment:
The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007…
The government also hasn’t brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.
But this part of the financial system, a Reuters examination shows, is filled with potential leads.
The article is very much worth reading in full, and sets forth specific examples of abuses, such as:
Document fabrications and forgeries (the article points out how the US attorney’s office has gone after forgeries of high school diploma and sports memorabilia but can’t be bothered with the much bigger stakes housing market)
Illegal foreclosures on active duty servicemen, which are criminal misdemeanors under the Servicemembers’ Civil Relief Act
Exaggerating the amount owed by charging for services never performed and overstating how much the borrower was in arrears
False claims in court that the bank had offered borrowers mortgage modifications
Persistent and “outrageous” misstatement of material facts by foreclosure mills
As readers of this blog know, this isn’t close to a complete list. You can add foreclosing on homes where there is no mortgage, foreclosing on burned-down homes where the insurer has made payment in full, mortgage baits and switches at closings and telling borrowers they had to default to be eligible for HAMP. The only bit of good news is there is a LPS investigation underway, but it has been ongoing since 2009. Funny how Catherine Masto in the comparatively small Nevada attorney general’s office has made more progress from an at the earliest October 2010 start date.
And we still have the banking industry repeating its mantra: everyone who lost his home was delinquent. Yes, in a kangaroo court, the accused will always lose. But the Washington Post runs this sort of propaganda in a woefully ignorant op-ed arguing in favor of the less than 50 state attorney general settlement, based on the false premises that a deal will lead to meaningful principal mods and that the lack of a deal (as opposed to pervasive abuses that are also keeping investors away from private label paper) is the source of the dreaded “uncertainty” and hence must be eliminated. (Adam Levitin has already admirably dispatched the reasoning, such as it is, that underlies this op ed, which is a rehash of tired arguments).
Notice the Reuters article doesn’t even get to frauds on investors: double dipping (charing both investors and borrowers for the same fee), misrepresentations to investors (false certifications by trustees and servicers that they held the collateral in good order, Section 11 Securities Act by making representations about loan quality when they never reviewed the loans), and other abuses (such as reporting foreclosed properties being sold months after the fact to allow them to collect additional servicing fees).
Yes, it isn’t hard to see that the Obama Administration is choosing to sit on its hands. But the interesting part is that the ranks of supine validators may be thinning a smidge. The more state level prosecutions and headline-grabbing private cases move forward, the more difficult it will be for the Team Obama to persuade the press that really, truly, nothing can be done about those big rich bankers.