The Fed messed with the wrong senator - David Dayen/Salon

[WillyT]

The Fed messed with the wrong senator
If foreclosure victims get justice, trace it back to a bad decision to stonewall Elizabeth Warren last week
BY DAVID DAYEN - Salon
MONDAY, APR 15, 2013 09:43 AM PDT



<snip>

The OCC faced a moment of truth: Power through with expensive and obviously flawed reviews, or pull the plug. They did the latter. Instead of completing the 500,000 reviews requested by individual borrowers, they would merely slot all 4.2 million, whether victims of foreclosure fraud or not, into several broad categories, and pay out a total of $3.6 billion. The regulators refused to release the methodology underlying that process, or any of the completed reviews from the third-party consultants.

This all spilled out in an ugly manner over the past week. OCC released the payment announcement, and you can describe reactions with two words: laughable and infuriating. The vast majority of borrowers – 3.4 million – will receive $1,000 or less. To pick a category at random, 234,000 borrowers had a loan modification approved, were kicked out of their homes anyway, and will receive for their trouble – for having their home effectively stolen – a whopping $300 (for comparison’s sake, the third-party consultants got $10,000 per review). In all, as many as 1.2 million borrowers faced foreclosure under potentially illegal circumstances. This translates to an endless supply of ready-made news stories about foreclosure victims who stand to receive an insultingly low check for their suffering, despite doing everything asked of them. CBS News has already started running them.

Rather than complying with congressional requests for additional information on the canceled reviews, OCC and the Fed decided to shroud the entire process in secrecy. And they picked maybe the worst person in Washington to stonewall: freshman Sen. Elizabeth Warren.

In a closed meeting last week, the agencies told Warren and Rep. Elijah Cummings that they could not provide documents Warren and Cummings requested about the specific violations by mortgage servicers, or the results of the reviews, because doing so would violate company “trade secrets” (apparently ripping off your customers and stripping their assets is now a valuable trade secret). Practically any other senator would not get much attention from being denied documents by a federal regulator.

But Warren, with a grass-roots army of enthusiastic supporters and a yen to deliver on her early promise, makes headlines crossing the street. And the foreclosure review debacle represented an excellent test case to expose the corrupt dealing between banks and the regulators who are supposed to curb their excesses, and also to pit Wall Street denizens getting rich off these crimes against ordinary victims who lost their homes. You couldn’t tee up a better issue for Warren, or a better entryway for traditional media to report it.

Last Thursday’s hearing on the reviews, the first congressional hearing on foreclosure fraud in over a year, provided the perfect set piece. Warren, along with Jack Reed, Sherrod Brown and other Senate Democrats, pounded the regulators for protecting the banks and ignoring homeowners suffering from illegal foreclosures. Warren highlighted that nobody will ever learn the precise extent of harm suffered at the hands of banks, and that without a true accounting, adequately compensating homeowners would be impossible. Brown focused on the role of the third-party consultants who operate as shadow regulators, performing work when the agencies lack capacity, but without any independence from the banks.

This drove more coverage about this topic than I’ve seen in a long time...

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More: http://www.salon.com/2013/04/15/fed_messed_with_the_wrong_senator/

[cantbeserious]

1. A Fighting Democrat - Go Senator Warren!

eom

[Terra Alta]

2. Finally someone who fights for us

You go, Warren. She has my support all the way.

[AndyA]

3. "Third-party consultants got $10,000 per review"

That cost will likely be written off somehow, so the American taxpayers end up paying for it.

I hope Elizabeth Warren keeps after them, they're messing with the wrong person because she's smarter than the lot of them.