Pursuant to my last post, a substantial part of the push to fire Ed DeMarco or force him to engage in principal reductions comes from the direct action bank accountability groups that have been the most aggressive and least connected to the “extend and pretend” idea. So even though writing down GSE loans without fully writing down the second liens (or possibly not at all) delivers a clear subsidy to the banks, the main anti-bank groups have gone along with this push on DeMarco. Why?
“Because they have 60% of the market,” said Liz Ryan Murray of National People’s Action, one of the leading bank accountability groups in the nation. “If we can crack 60% of the market, we open up the scene for the rest of the industry, and numbers-wise that’ll have a big impact.”
This comes “primarily from the perspective of homeowners,” according to Murray. But there’s no guarantee that even the removal of DeMarco would change GSE policy on housing. A removal of DeMarco would give the spot of acting director up to one of his deputies, who presumably has the same focus. Bank accountability leaders spoke of a “third way” in an interview, the idea that anyone in government right now who has been confirmed by the Senate could be installed as acting director, for example a deputy from HUD. But this is just unlikely when you consider the Administration’s observable behavior with regards to FHFA. Right now, there’s no nominee in place to head up FHFA; in the three YEARS that DeMarco has been acting director, there’s only been a nominee in place for three months. “There needs to be a nominee, as a show of seriousness on the part of the Administration,” Murray acknowledged.
But if the lack of seriousness wasn’t already evident on FHFA and the broader issue of principal reduction, I don’t know what else you need for convincing. The Administration brokered a settlement that allows banks to pay for substantial amounts of their settlement by bulldozing or donating homes or waiving deficiency judgments, something they do as a matter of course. The lack of a nominee for FHFA is another example. So is the lack of sanctions for servicers under HAMP, or the lack of meaningful investigations into financial fraud, or the constant settlements where the guilty party can “neither admit nor deny” wrongdoing. I could go on.
“We want the President to make principal reduction a priority,” said Tracy Van Slyke of the New Bottom Line. But the focus on DeMarco has been very convenient for the Administration, shifting away from their housing deficiencies and toward this one Bush-era official who is supposedly gumming up the works.
Apparently this focus is about to change. Over the next several weeks, these bank accountability leaders told me they will step up their direct efforts against the banks and also the Administration. One of their subjects of inquiry will be the securitization fraud task force, officially known as the “RMBS working group,” the panel co-chaired by New York Attorney General Eric Schneiderman, empowered to look into criminal fraud in the securitization process. After months of back-channel queries about the intentions and resources behind this effort, the groups feel as if they need to take it out into the open to solve “the case of the missing task force,” as one of them put it.
The effort will include a deliberate connection to the President’s re-election campaign. Many of the targets for direct action will be the hundreds of OFA (Obama for America) offices across the country. “That’s what makes this thing more real,” Tracy Van Slyke said. “Underwater homeowners are a huge potential voting block. There’s a lot of anger out there. We have to build up the pressure.”
In addition, the groups plan to hold actions at over 40 shareholder meetings across the country, mostly concentrated on the finance sector. They expect thousands of people at these actions, according to Ilana Berger of The New Bottom Line. The idea is to demonstrate “how these banks are draining wealth from communities” in a variety of ways, from the foreclosure crisis to investments in private prisons that incarcerate communities of color in high numbers. “John Stumpf (the CEO of Wells Fargo) is on the board of a lot of other corporations,” Berger said. “We want to show the different ways of how these big banks touch our lives.”
Finally, in addition to direct actions at banks, there will be additional efforts to move money out of the big banks. Fifteen different cities have pending “responsible banking ordinances” that would force the divestment of local funds from banks that harm communities.
So after a pause dedicated to beating up on DeMarco, we may return to that spirit of street actions for the 99%, targeted at the banks as well as the political leadership. And there was also an acknowledgement that the past deficiencies of the foreclosure mitigation and other programs need to become a central part of the agenda. As Liz Ryan Murray said, “Our strategy is how do we move forward to better, and maybe that’s a mistake.”