Housing Wire reports on bank attorneys preparing for “showdowns” with the RMBS working group on fraud cases. Well, they have to justify their billings to their bosses, don’t they? The reality of whether banks should sweat the investigation is far less clear. In fact, we have more information from a couple sources today that suggest the attorneys don’t have to keep up this facade.

First you have this story on the failures of the regulators to manage the Fail Whale trades at JPMorgan Chase while they were happening, despite having access inside the bank.

Scores of federal regulators are stationed inside JPMorgan Chase’s Manhattan headquarters, but none of them were assigned to the powerful unit that recently disclosed a multibillion trading loss.

Roughly 40 examiners from the Federal Reserve Bank of New York and 70 staff members from the Office of the Comptroller of the Currency are embedded in the nation’s largest bank. They are typically assigned to the departments undertaking the greatest risks, like the structured products trading desk. Even as the chief investment office swelled in size and made increasingly large bets, regulators did not put any examiners in the unit’s offices in London or New York, according to current and former regulators who spoke only on condition of anonymity.

Senior JPMorgan executives assured the bank’s watchdogs after the financial crisis that the chief investment office, with hundreds of billions in investments, was not taking risks that would be a cause for concern, people briefed on the matter said. Just weeks before the trading losses became public, bank officials also dismissed the worry of a senior New York Fed examiner about the mounting size of the bets, according to current Fed officials.

In other words, the bank told their regulators not to worry about this little side office where hundreds of billions of dollars were being funneled for casino gambling, and the regulators happily obliged.

But wait, you say. We’re talking about the OCC and the Federal Reserve and the New York Fed – you know, the one where JPMorgan Chase CEO Jamie Dimon sits on the board of directors – traditionally the most compliant banking regulators in the government. They’re not part of the RMBS working group investigation. That includes law enforcement personnel, the Securities and Exchange Commission, etc. So it’s apples and oranges.

OK, let’s go to the apples, then. The bankruptcy of ResCap, the mortgage unit for Ally Financial, shed some more light on the pattern of abuse by the servicer against their customers. The Federal Reserve released a letter related to the bankruptcy, detailing an accounting of mortgage servicing abuses that came out of a 2011 consent decree with Ally, which was previously known as GMAC. Take a look at these numbers, based on a sampling of the loan files:

GMAC started foreclosure proceedings on 1,270 borrowers who were in some stage of the bankruptcy process, and thus should have been protected from foreclosure.

GMAC carried out foreclosure sales on 1,577 borrowers who were awaiting a decision about a loan modification. This is known as “dual tracking” and is one of the biggest complaints of homeowners and their advocates.

The mortgage servicer hired a law firm that was subsequently “delisted” to process 30,235 foreclosures. The names of the firms are redacted, but presumably include several of those accused of forging documents as part of the robo-signing scandal.

The mortgage servicer denied 50,030 borrowers for a government-run Home Affordable Modification Program, and then offered no alternative modification.

This review covered roughly 230,000 borrowers who were in some stage of foreclosure in 2009 or 2010. The overlap in these numbers is not revealed here, but you’re talking about a significant number of borrowers dealt with harshly by the system.

These numbers formed the OCC-led “foreclosure review” process, which has thus far exacted absolutely no price on the banks – the fines were literally folded into the larger foreclosure fraud settlement. In February of this year, with pretty much the same information in hand, most of the federal regulators working on the task force, primarily the Justice Department and state Attorneys General, came to the above-mentioned generous settlement with the five leading banks, the details of which I’ve gone over on multiple occasions.

So I would say that the banks can rest easy, turn over documents – as Wells Fargo did recently – and maybe even play hardball with their own lawyers on their salaries. Because the regulators have been sufficiently de-fanged that the banks are in little danger of accountability.