The Congressional Progressive Caucus met with New York Attorney General Eric Schneiderman today for a hearing on how to prevent a million foreclosures. Not much happened at the hearing. More interesting was a letter sent by members of the CPC authored by Maxine Waters to Eric Schneiderman asking him to hire Rep. Brad Miller to run the fraud task force. Here’s the letter text and the letter itself.
Dear Residential Mortgage-Backed Securities Working Group Co-Chairs:
We are writing to you today in your capacity as co-chairs of the Residential Mortgage-Backed Securities (RMBS) Working Group to request that you select Representative Brad Miller (NC-13) to be the executive director of this new task force.
Rep. Miller has the best mix of skills and experience to steer this new Working Group. As colleagues of Rep. Miller in Congress, we’ve seen that he’s committed his career to protecting consumers and fighting financial fraud. His achievements include authorship of the Mortgage Reform and Anti-Predatory Lending Act of 2009, which was ultimately included in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Rep. Miller also co-wrote the original legislation that led to the creation of the Consumer Financial Protection Bureau, has been a fierce and prescient advocate for principal reduction, and has fought to reform mortgage servicing. The Congressman has likewise been a leading advocate in Congress for the financial protection of servicemembers facing economic hardship and foreclosure.
Finally, it is important to note that prior to entering Congress in 2003, Rep. Miller was a civil litigator with 20 years of experience.
In January, President Obama announced that the RMBS Working Group “will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans.” The primary means of achieving these goals is through an investigation into the creation and sale of securities backed by residential mortgages leading up to the 2008 financial crisis, and prosecution of any wrongdoing uncovered. We agree that this effort is crucial to providing long-awaited restitution to homeowners and investors, restoring the integrity of American capital markets, and preventing the next financial crisis.
With that said, we were dismayed by recent press reports indicating that the RMBS Working Group does not yet have phones, office headquarters, or an executive director. We understand that the task force is leveraging pre-existing enforcement efforts and staff at participating agencies, but we remain concerned that the Working Group has not independently established a robust infrastructure commensurate with the charge of investigating this component of the 2008 financial crisis.
With three months having passed since the initial announcement of the creation of the RMBS Working Group, we fear that this group’s efforts may be stalled. The best way to reignite this important undertaking is to hire a qualified, aggressive and committed executive director, and give them the power and budget to hire the necessary support staff. Without quick action in this regard, public confidence in the Working Group may be at risk.
We would welcome the opportunity to speak with you further about this request, and we are eager to do anything we can, as Members of Congress, to facilitate the success of the RMBS task force.
The only question in the housing finance complex is whether there is any credible threat to the servicers, regulators, and politicians who run the system. That’s the only thing that can get them to negotiate an end to the morasse we’re in. The mortgage settlement negotiations were for a time a threat, because state officials could have gone after the banks. They’ve largely given up that leverage. This letter is an implicit rebuke to Schneiderman on that score, since we already know that the task force isn’t going to hire Miller because of concern that he would actually go after the people that committed wrongdoings. [cont’d.]
In other Congressional news, George Zornick of The Nation reports on Republican oversight over the Schneiderman/Obama mortgage fraud task force. Rep. Patrick McHenry sent a letter with the following questions:
1. Please explain in detail the mission and goals of the Residential Mortgage-Backed Securities Working Group.
2. Please provide a detailed accounting of the Residential Mortgage-Backed Working Group’s anticipated staffing, funding (both state and federal sources), and expenses.
3. Please distinguish in detail how the work of the Residential Mortgage-Backed Securities Working Group will differ from the existing work of the Financial Fraud Enforcement Task Force.
4. Insofar as the Financial Enforcement Task Force has achieved “limited success” and “has fail[ed] to produce any major prosecutions stemming from the housing crisis,” how will the Residential Mortgage-Backed Securities Working Group achieve different results?
5. The Office of SIGTARP recently announced a 72-month sentence for a defendant convicted of defrauding financial clients who sought mortgage modifications. If the Office of SIGTARP continues to pursue convictions stemming from illegal mortgage-related activities, please explain what enforcement gap the Residential Mortgage-Backed Securities Working Group will fill.
6. Please explain how the work of the Residential Mortgage-Backed Securities Working Group will be affected by any settlement agreement executed by state attorneys general and large financial institutions. Will such a settlement affect the Residential Mortgage-Backed Securities Working Group’s ability to pursue actions against the financial institutions who are parties to the settlement? If so, how?
7. To the extent that the work of the Residential Mortgage-Backed Securities Working Group is not duplicative or redundant and actually succeeds where other efforts have failed, will the settlement agreement with state attorneys general preserve all avenues of relief and compensation for any newly identified homeowner who was not in default yet foreclosed upon anyway?
While Zornick implied that these questions are meant to harass the task force, I don’t actually see any proof of that. They are reasonable questions. It’s pretty obvious that McHenry and his Republican colleagues don’t have good intentions on bank prosecutions, but then, neither does the Obama administration. So it’s just more kabuki to make it look like there’s a fight, when in fact it’s a bunch of pedantic silliness over who gets a better parking spot.