Fraudclosure: Will State AGs Step Up to Their Moment in History?

Submitted by Mary Bottari on

stopforeclosurefraudRumor has it that the 50-state attorneys general investigation into the Fraudclosure scandal is wrapping up. It's time for a backbone check. Will the state attorneys general just ask the big banks and service providers to turn over a chunk of change from seemingly bottomless pockets? (This strategy was pursued by the Security and Exchange Commission (SEC) with little impact). Or will Iowa Attorney General Tom Miller take the lead in wrestling a real settlement out of the banks, so that families hammered by unemployment and underemployment can stay in their homes?

Widespread Criminality

Americans know that the big banks and the mortgage service providers got us into this hole by pursuing an array of financial crimes. The SEC settlements alone have revealed a plethora of illegal, predatory and deceptive lending related to mortgages, securities fraud, accounting fraud, insider trading, brokerage fraud, bribery of government officials, criminal conflict of interest, deception of shareholders and investors, and more.

Now the "robo-signing" scandal is pulling back the curtain on Act II of this white-collar crime spree -- revealing a new array of financial crimes by the very same institutions: robo-signing, fake witnesses, fake notaries, fake documents, fake attorneys, not to mention plain old theft as servicers rob consumers of hundreds or thousands of dollars in misapplied fees. There are additional crimes related to the way that banks have failed to correctly transfer promissory notes through the system and efforts to mislead and defraud investors. The short story is that many homeowners were foreclosed upon based on falsified documents by a bank who was not the true holder of the mortgage note. This is a crisis not only for individual homeowners, but for investors who bought flawed mortgage-backed securities and for the financial system as a whole.

Not a Single Prosecution of a Major Player

Perverse incentives on Wall Street allowed top executives to make more money on flawed loans than boring old 30-year mortgages. Even though there is widespread agreement that Wall Street’s endless appetite for high-interest, high-fees loans to fuel the mortgage securitization machine had a causal role in supercharging the housing bubble, not one mortgage servicer provider or big bank CEO has been put in jail. This compares to over 1,000 successful prosecutions of top officers during the Savings and Loan crisis of the late 1980s.

While the SEC has been churning out fines resulting in a long list of "settlements", Wall Street firms are beginning to set aside money and treat these actions merely as the cost of doing business.

There is nothing more instructive than jail time, but the U.S. Department of Justice (DOJ) has been hoodwinked by America’s biggest hoodlums, preferring to arrest a string of penny-ante Jersey mobsters than the Mafioso hiding in plain sight at Wall Street and Broadway. The DOJ delights in arresting people like Vinny Carwash" Frogiero, Frank "Meatball" Ballantoni, Anthino "Hootie" Russo. How about Jamie "Pretty Boy" Dimon, Lloyd "Godswork" Blankfein and Vikram "Slumdog" Pandit?

History is Calling

In the history of the financial crisis, state AGs have so far come out looking pretty good. State AGs were the first in the nation to recognize that the predatory lending practices of firms such as Ameriquest and Countrywide were a danger to consumers and to the entire U.S. economy. In 2004, they were radically preempted from taking action against these crimes by Bush-appointed federal regulators at the Office of the Comptroller of the Currency. Now state AGs have another moment to outshine negligent federal prosecutors.

State AGs can take a series of actions that the Feds have failed to take. First of all, they can book the crooks and force top officers to trade pinstripes for jail stripes. Secondly, they can force the banks into settlements with individual homeowners that really take a bite out of their profits, complete with foreclosure redos and damages for harmed homeowners. They can also subject the banks to ongoing independent audits of their foreclosure procedures and they can demand that the banks force principle write-downs and other across-the-board measures that will stabilize communities and the economy.

February 3rd National Day of Action

National People's Action and other foreclosure groups area calling for a national day of action on Thursday, Feb. 3 to urge the AGs to do the right thing. But why wait? You can go to BanskterUSA.org to email the lead investigator, Iowa AG Tom Miller, and tell him to do the right thing. You can also click here to find your AG's phone number so you can ask him or her directly for meaningful action on foreclosure.

If you are struggling with these issues, think about meeting up with your neighbors. "Mortgage Madness Meetups" are being facilitated by Huffington Post. The next worldwide meetup day is February 8th. Finally, if you are trapped in the snow today check out Dylan Ratigan's special series on the housing crisis "No Way to Live" on MSNBC.

Banking
BanksterUSA
Mary Bottari
Mary Bottari

Mary Bottari is a reporter for the Center for Media and Democracy (CMD). She helped launch CMD's award-winning ALEC Exposed investigation and is a two-time recipient of the Sidney Prize for public interest journalism from the Sidney Hillman Foundation.

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Comments

KKalmes replied on

You have run out of severance and are now living on somewhere between $600 - $1400 a month in unemployment, which has been a battle with Republicans to keep extending because those collecting unemployment are "drug-addicts, hobos, lazy, good for nothing, unincentivized, parasites." First to go was the second car, which is understandable it a convenience, but you're not going anywhere on a daily basis so you can share one car. Important to sell if you aren't upside/down in the car, or work with your lender if you are. Call them and you may be surprised how helpful they can be. You're 59 years old... you do not have a college diploma, you have specialized for 40 years in being a good employee with a great work ethic, flexible multi-tasker, energetic team leader and new project coordinator. When you had that late Friday afternoon meeting, you were told you were making too much money for the position. They were restructuring and might even out-source your job. When does depression turn to despair? Or is it despair first and then depression... The one thing you know for sure is that you were three years away from retirement and you are now a few months away from living under a bridge and looking for a really sturdy box! Dear GOP and Democratic leaders, Unemployed people are your constituents even though we can't afford to contribute to your re-election campaigns. We are not a blight on society like the lepers that were once quarantined in leper colonies. We are your brothers, sisters, mothers, fathers, cousins, uncles, aunts, grandchildren, neighbors, friends, the worker who once stood on a production line or sat in the next cubicle from someone you know. We are not a pawn in a game of GOP holding Democratic legislation hostage! We are not a pawn in the balance the budget debate! We are not the reason the economy was driven off the cliff! We are the back-bone of America... we are the middle-class! IN CONGRESS, JULY 4, 1776 The unanimous Declaration of the thirteen united States of America "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness." Actions have consequences... inaction has consequences... the consent of the governed is required to serve... voting is the 'Right of the People to alter or to abolish".

Tbryant replied on

While I agree with most of the previous commenter's thoughts, this is not a GOP or Dem issue. They both are in bed with the banks. If you look at the Federal Election Commission website, since the AG investigation began, the banks have poured huge amounts of "campaign contributions" into the Democratic Attorneys General Association coffers. Besides being illegal, these donations show that rights and justice are commodities to be bought and sold in our country. If the AGs are receiving huge financial gifts from the banks, do you really expect them to stand up for your rights? Doubtful! And where is the FBI through all this? Nowhere! Unfortunately, this is how corrupt our ENTIRE government has become.