If you thought the foreclosure fraud settlement was bad, get this: the Office of the Comptroller of the Currency, the weakest federal regulator in the financial sphere (I’ve taken to calling them the Office of Bank Advocacy), decided to use the cover of the big settlement to announce their fines in their consent order with big bank servicers. And the settlement with Bank of America, Citibank, JPMorgan Chase and Wells Fargo – 4 of the 14 servicers who were operating under a consent decree – is even more paltry than the state/federal settlement.

The Office of the Comptroller of the Currency (OCC) today announced agreements in principle with four large national bank mortgage servicers to settle civil money penalties in connection with the unsafe and unsound mortgage servicing and foreclosure practices that were the subject of comprehensive cease and desist orders issued by the OCC in April 2011 [...]

In the agreements in principle struck by the OCC with these mortgage servicers, the servicers do not contest the OCC’s ability to impose penalties aggregating $394 million, and the OCC agrees to hold in abeyance imposition of such penalties provided the servicers make payments and take other actions under the federal-state settlement with a value equal to at least the penalty amounts that each servicer acknowledges that the OCC could impose. The amounts for each servicer are $164 million for Bank of America, $34 million for Citibank, $113 million for JPMorgan Chase, and $83 million for Wells Fargo. If after three years, a servicer has not paid an amount equal to its respective penalty, the OCC will assess a penalty against the servicer for the difference between the aggregate value of the actions and payments under the agreement and that servicer’s OCC penalty amount.

These seemingly random numbers amount to even less than the banks pay the federal government in the state/federal settlement ($750 million). And as you can see in the highlighted section, they don’t really exist. As long as the banks pay the state/federal settlement, they don’t have to pay OCC.

The consent orders also proposed to fix “unsound” servicing practices, which makes the nationwide servicing standards announced in the foreclosure fraud settlement somewhat redundant. Anyway, the Consumer Financial Protection Bureau will ultimately determine servicing standards, as per their mandate.

But wait, says the OCC. There are still those “independent reviews” mandated by the consent order, where millions of homeowners can request a review of their cases and foreclosure actions. What we know is that those independent reviews are being overseen by consultants hired by and paid by the banks. And the banks have refused to disclose the financial relationship in those consulting agreements. It’s really worse than a joke.

Against my better judgment I will let the acting Comptroller of the Currency, John Walsh, speak:

The actions announced today mark important progress in addressing the problems associated with foreclosure processing and are a critical step toward restoring a functioning industry that protects the rights of the customers it serves,” said acting Comptroller of the Currency John Walsh. “The OCC has worked closely with the Department of Justice and other federal agencies throughout the federal-state foreclosure settlement negotiations. We have worked to coordinate the comprehensive fixes to mortgage servicing and foreclosure practices that we required in our April 2011 cease and desist orders to ensure that work complements actions required by the federal-state settlement.

I’m looking for the true part of that statement and have not yet found it.

I don’t even think you could find officials in the federal government outside the OCC to tell you that their consent orders represented anything but a whitewash. But they cleverly hid them behind the bigger settlement today in the hopes that nobody would notice.