Posted by kevin on April 5, 2013 under Foreclosure Blog | 
Earlier this week, I blogged about the Chairperson of he SEC going to Promontory, the audit company that has come under fire because of the botched Independent Foreclosure Reviews. Yesterday, the Government Accountability Office (GAO) faulted the Office of the Comptroller of Currency (OCC) and Federal Reserve for not insuring that banks were using consistent methods to determine which foreclosure files to scrutinize for possible errors.
Auditors including Promontory Financial Group, rather than following through on the audits, pushed for settlement. The settlement is listed at $9.3 billion, but like the so-called $25 billion settlement, the lenders are putting up only a small fraction of the settlement in hard cash. The rest are a complicated scheme of credits that defy common sense. More importantly, by abandoning the audits, the questions becomes, how do you know who is entitled to settlement proceeds and how much?
The GAO did not focus on these practical issues, but just said that the auditors should have at least had the same checklist for their audits- otherwise people with the same issue could get a different result. GAO said that the buck stopped with OCC and the Fed. I guess they dropped the buck.
The borrowers are the people. And the people get the short end when government takes care of the big guys. Our greatest President (or at least in the top 2) has been in the press a lot over the last couple of months because of the Spielberg movie. I wonder what Mr. Lincoln would think of this government of the people, by the people, for the people?
Posted by kevin on April 2, 2013 under Foreclosure Blog |
A recurring theme in this blog is the sad fact the government has done little to protect the homeowner in the mortgage crisis. This applies to the federal government, the state government and the judiciary.
Last week, you may have read articles about the DOJ arresting hedge fund types for insider trading. Like the old days. The feds swoop down on the guy in the $2000 suit, read him his rights, handcuff him and make him do the perp walk usually in front of news cameras. The feds, including the SEC, have always been good at insider trading cases. That is when people share non-public or insider information and make a profit on the sale of a security.
But, what about going after the banks or investment houses for all the illegal mortgages. Not a good a record. One of the reasons why is that the regulators are too close to the people they are supposed to regulate. You don’t want to bite the next hand that is going to feed you.
This morning’s WSJ has a lead article that Mary Schapiro, the chairman of the SEC, is taking a job with Promontary Financial Group. Promontory was the lead auditor hired by the OCC for the Independent Foreclosure Review. What a fiasco! The OCC allowed the banks to pick their own auditor (sort of like the Yankees picking their own umps). When the review indicated much more funny business than the banks had advised, what did Promontory do? They stopped the audit and came to some sort of settlement most of which was never paid (to date). This whole debacle was presented over a period of months in Yves Smith’s excellent blog, Naked Capitalism. On top of that, Schapiro is being considered for board membership at GE with a yearly stipend of $250,000. Cha ching.
Now, I am not saying that Ms. Schapiro is not qualified for the job that she will take at Promontory. And I am not saying that she is not entitled to make money in our capitalist society. However, I am saying that it leaves the public with a bad taste in their mouths when high ranking officials go to the other side of the street and work for the same companies that have added to the economic woes of the average American.
