Here's something to be thankful for this day: Elizabeth Warren in Obama's economic team, already protecting consumers. HuffPo's Shahien Nasiripour reviews the record, and finds she was instrumental in recognizing the potential danger in the out-of-state notarization bill that Obama eventually vetoed.
The bill, which passed both houses of Congress and awaited President Obama's signature to become law, essentially would have compelled notaries to accept out-of-state notarizations, regardless of the rules in those states.
State officials across the country--who have been pursuing probes looking into wrongdoing within the foreclosure process-- feared that those jurisdictions with lax standards could have become hotbeds for foreclosure documentation fraud. Lenders and mortgage companies could have used those states as central clearing houses to produce bogus foreclosure paperwork, and then export those documents to other states with more stringent regulations--an expedient bypass around the strictures.
Obama ultimately declined to sign the law, and the House of Representatives failed to override the veto.
Officials said Warren was among the first federal officials to recognize the significance of the notary bill, titled the Interstate Recognition of Notarizations Act of 2010. She met with authorities from several states and then relayed their concerns to influential administration officials.
During the morning of Oct. 6, Warren's team at the Treasury Department wrote the first memos on the bill, raising questions about the possible consequences if it became law, these people said.
That evening, Warren met for 30 minutes with Peter Rouse, Obama's interim chief of staff, her calendar shows. She later spent an hour on the phone with Illinois Attorney General Lisa Madigan, who once sued Countrywide Financial and exacted an $8.4 billion multi-state settlement.
The next day, Warren participated in an afternoon meeting on the bill, her calendar shows. During that meeting one of Obama's top spokesmen, Dan Pfeiffer, posted an entry on the White House Blog explaining why Obama would not sign the bill.
On Oct. 8, Obama declined to sign the bill into law, citing the need for "further deliberations about the possible unintended impact" of the bill on "consumer protections, including those for mortgages."
Documents released Wednesday show that Warren met or spoke with at least eight state officials leading a 50-state investigation into possibly-fraudulent mortgage documentation practices.
As Nasiripour notes, Warren is increasingly being targeted by Republicans who want to stymy the work of the new agency. Knowing full well the forces that would line up against her, Warren has been meeting extensively with "bankers and their representatives. Financial executives and lobbyists have noted that Warren was reaching out to them more than they initially expected." Hopefully that outreach will help immunize her from her critics, because we need her, as the notarization bill veto demonstrates.
(See MediaFreeze's recommended diary for further discussion.)
Yves does a thorough smackdown on the departing Michael Barr’s description of all the things the government is going to get to the bottom of the foreclosure fraud problem, noting that the foreclosure task force simply isn’t investigating the problem in enough detail to understand, much less solve, the problem.
But I wanted to look just at Barr’s language, both in his interview with Felix Salmon and in his presentation to the Financial Stability Oversight Council yesterday. Here are the five things he described as the key focus of the Foreclosure Working Group:
- Determining the scope of problems
- Holding the banks accountable for fixing these problems
- Making sure individuals who have been harmed are given redress and that firms pay penalties where appropriate for their actions
- Getting the mortgage servicing industry to do a better job for households in financial difficulty by providing alternatives to foreclosure
- Acting in a coordinated and comprehensive way to hold the firms accountable, bring clarity and certainty, and help households
Note, already, the choice of language here. The working group will “hold the banks accountable … for fixing these problems.” The firms will “pay penalties where appropriate for their actions.”
Barr uses the language the federal government has been consistently using since the scope of this problem became widely clear, in which the government envisions “holding banks accountable” by forcing them to operate effectively going forward, while making right the crimes of the past. Nowhere, in his presentation to the FSOC at least, does Barr envision holding the people who committed fraud accountable. In fact, there’s a lovely detail at 7:54 where Barr describes that the process is designed to assess whether affidavits and claims “are accurate.” Now, the government learned sometime since May–six months ago now–that they are not. But they have not yet prosecuted anyone for fraud. Which leads me to believe that when Barr says “assess whether affidavits are accurate,” he means, “assess whether they accurately reflect the state of the loan,” and not whether “the claims made by robo-signers are in fact true.”
And besides, how in hell could the government give those who have been harmed redress if the government is only reviewing a select subset of the loan files? Is the government going to provide everyone who believes they were screwed some legal aid to prove their claim?
Now compare what the soon-to-be-gone Barr told the FSOC in its kabuki public session with what he told Salmon.
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