This just in from the "It Couldn't Possibly Get Any Worse" Department: The first wave of checks from the bungled foreclosure abuse settlement landed in mailboxes around the country this week, but when people tried to cash them, a number of them bounced. I don't know about you, but if someone who worked for me screwed up something like a $3.6 billion payout, I'd fire them.
Let's face it. The biggest bank regulator in the U.S. is an abject failure. Worse, it's costing us oodles of money, and not just from bounced checks. The Office of the Comptroller of the Currency spent the past decade doing really dumb things (and in many cases nothing) while homeowners got hammered, our economy tanked and billions of taxpayer dollars were squandered.
Enough is enough. Memo to the OCC: Either earn your keep or face the consequences.
Bounced checks notwithstanding, the agency's latest affront to taxpayers is of course the entirely inadequate foreclosure abuse settlement. Its failure to win justice for homeowners that were cheated out of their homes is unacceptable.
The problems began in 2010 with the "robo-signing" scandal, in which several large financial institutions instructed their employees to falsify thousands of documents every day to speed the foreclosure process.
There should have been an immediate criminal investigation, and there wasn't. There should have been a perp walk at some point, but there wasn't. Instead of pressing the U.S. Attorney to prosecute, the OCC and the Federal Reserve created an independent foreclosure review. The mandate of this review was "simple enough," said Comptroller of the Currency Tom Curry: "fix what was broken and compensate those who were harmed."
The review did neither. First the Comptroller's office punted authority for the reviews to "independent" consulting firms, many of which had large contracts with the same banks they were supposed to review. The result: After blowing through nearly $2 billion in two years, the consultants still had millions of cases left to review, and no idea whether their findings were reliable, according to the Government Accountability Office.
Rep. Carolyn B Maloney (D-NY), no shrinking violet, was far too kind when she said, the final settlement was "too little, too late."
Another way of characterizing the settlement: the big banks got away with it -- yet again.
Effectively, after screwing around for more than 24 months, the Office of the Comptroller simply waived a white flag and acquiesced to a settlement in which 13 of the largest mortgage servicers agreed to pay $3.6 billion to homeowners. That may sound like a lot of dough, but it's not.
Because Mr. Curry rubber-stamped a truly flawed process and then, under pressure to provide relief to aggrieved homeowners before the Second Coming, he stopped the process prematurely. As a result, we have no idea how many Americans were victimized. So instead of settlement dollars going only to real victims (which would be the equitable solution for both them and the banks), with a few exceptions, the reparations will be divided between all 4.2 million homeowners who were eligible for review. By my calculations, that's less than a thousand dollars per (in many cases former) homeowner. It's beyond insulting. It's an outrage.
Some members of the U.S. Senate are not amused. First among them is Sen. Elizabeth Warren (D-Mass.), who grilled the OCC during a recent hearing over the settlement's paltry compensation.