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“A Galloping Conservative Radicalism”: If Republicans Want Respect, They Need To Stop Using The Budget As A Weapon

One of the central provisions of the Dodd-Frank financial reform package was the creation of the Consumer Financial Protection Bureau, which is charged with preventing banks and other financial institutions from preying on vulnerable consumers. Republicans hate the CFPB, and have taken to complaining about its funding stream, which comes from the Federal Reserve rather than the normal budgeting process.

They have a point, but they have only themselves to blame, since the GOP has all but relinquished its claim to responsible oversight by using the budget to cripple laws it doesn’t like.

This steaming Washington Examiner editorial lambasting Reps. Maxine Waters (D-Calif.) and Al Green (D-Texas) is a helpful distillation of the GOP position:

Simply put, Waters and Green view the congressional appropriations process as an obstacle to doing things they judge to be good, rather than as a tool by which the American people make sure the executive branch properly enforces the laws they instructed Congress to approve. This is how a democratic republic functions. Do Waters and Green think other agencies — say, the IRS, NSA, the Department of Homeland Security or perhaps the FBI — should be similarly unaccountable to the people’s representatives?

And what will they do when, having freed the bureaucrats of congressional shackles, they find a Republican president using the CFPB in nefarious ways, with Congress powerless to intervene? [Washington Examiner]

I have some sympathy with this perspective. Putting the CFPB outside the normal budget does reduce its democratic accountability. And the agency hasn’t been covering itself with glory of late; a recent report from American Banker found systematic discrimination in hiring and promotion. It’s plausible that more oversight could have prevented that.

But the problem is that conservatives obviously aren’t concerned about whether taxpayers are getting a good deal. They want to cut the bejesus out of the agency’s funding, even if it means inviting another financial crisis. The GOP budget from earlier this year zeroed out CFPB funding after 2016. Republicans claimed they wouldn’t get rid of it altogether, but given the GOP’s animosity toward pro-consumer regulations, or any programs that benefit the non-rich, it’s easy to suspect that they are trying to quietly axe the agency.

The truth is that the strongest possible oversight authority over the CFPB — the power of life and death — is still firmly in Congress’ hands. The legislature created the agency, and it may destroy it. The trouble is that Republicans don’t have enough votes to destroy the CFPB. They don’t even have a majority in the Senate, never mind enough votes to override a guaranteed veto from President Obama.

By dividing government, the Constitution forces parties into compromise. For a normal partisan with a basic commitment to the norms of American democracy, the idea is to hammer out compromises with the other side until you are in a position to enact a suite of policies. You can’t get everything, but you can get half a loaf here and there. Then, when you get the rare chance at controlling both Congress and the presidency, you pass a big policy suite, and hope people like it enough that it sticks.

That’s a reasonably fair description of how Democrats behaved from 2006 to 2010.

But Republicans have abandoned this set of norms in favor of an enraged constitutional hardball. Under this model, when you don’t have enough votes to pass your agenda, you use every procedural tactic at your disposal to force the other side to embrace it. At the extreme, this includes threatening grievous damage to the nation, by deliberately defaulting on the debt or shutting down the government. Additionally, since what passes for Republican policy is simply repealing laws or privatizing huge swathes of the government, starving agencies for funds is a nice way to accomplish that goal on the sly.

Republicans have eased up on the government-by-hostage-crisis of late, but this behavior is what inspires Democrats to do an end-run around the budget process. Since they can’t trust Republicans to not use the budget process as part of the policy proxy war, there’s a constant search for ways to protect critical agencies from procedural extremism.

It’s not a great situation. But because our poorly designed institutions have collided with a galloping conservative radicalism, it is going to be a more common one.

 

By: Ryan Cooper, National Correspondent at TheWeek.com,  June 24, 2014

June 25, 2014 Posted by | Conservatives, Consumer Financial Protection Bureau, Federal Budget, Financial Institutions | , , , , , , | Leave a comment

“Bank Of America’s Foreclosure Frenzy”: Maximizing Fees And Profits For Big Banks

In one corner, we have five former Bank of America Corp. employees who told a federal court they were instructed to mislead customers on the verge of losing their homes and stall their applications for loan modifications.

In another corner, we have Bank of America, which says nothing could be further from the truth.

Who’s right? If anything, the bank’s strident denials make me more inclined to believe the workers’ claims. “These allegations are absurd, patently false and contrary to Bank of America’s long-standing policy only to foreclose as a last resort when other available options to help keep people in their home have been exhausted,” Jumana Bauwens, a Bank of America spokeswoman, told Bloomberg News in an email this week.

Perhaps some of the allegations may be wrong. But to say all of them are obviously false? You have to wonder. A lot of the former employees’ claims make sense.

We have known for years that the U.S. Treasury Department’s Home Affordable Modification Program failed miserably at its stated goal of helping struggling homeowners. In part, that’s because companies and divisions of major banks that service mortgage loans often can make more money from foreclosures than from loan modifications.

It didn’t bother the banking industry’s “robo-signers” that they risked committing perjury when they signed false affidavits filed in courthouses across the country to speed foreclosures along. Now, Bank of America would have us believe that all of these former employees were making things up under penalty of perjury when they came forward and told their stories.

The former employees’ statements were filed with a federal court in Boston as part of a lawsuit against Bank of America by homeowners who say they were improperly denied permanent loan modifications. Bank of America says it will respond to the statements in greater detail in a court filing.

The workers gave horrific accounts about Bank of America’s compliance with the Home Affordable Modification Program. One consistent theme was that they said they were told to deceive borrowers about the status of their applications.

“My colleagues and I were instructed to inform homeowners that modification documents were not received on time, not received at all, or that documents were missing, even when, in fact, all documents were received in full and on time,” said Theresa Terrelonge of Grand Prairie, TX, who worked at Bank of America from 2009 to 2010 as a loan-servicing representative. She said workers “were awarded incentives such as $25 in cash, or as a restaurant gift card” based on “how many applications for loan modifications they could decline.”

Simone Gordon of Orange, NJ, who left Bank of America in 2012, gave a similar account. “Employees were rewarded by meeting a quota of placing a specific number of accounts into foreclosure, including accounts in which the borrower fulfilled a HAMP trial period,” Gordon said. “For example, a collector who placed ten or more accounts into foreclosure in a given month received a $500 bonus.” Other rewards for placing accounts into foreclosure included gift cards to Target or Bed, Bath & Beyond.

“We were regularly drilled that it was our job to maximize fees for the bank by fostering and extending delay of the HAMP modification process by any means we could — this included by lying to customers,” Gordon said.

William Wilson, a Bank of America underwriter and manager in Charlotte, NC from 2010 to 2012, described what he said was called a “blitz.” About twice a month, he said, Bank of America would order case managers and underwriters to clean out the backlog of HAMP applications by rejecting any file in which the documents were more than 60 days old. Employees were instructed to “enter a reason that would justify declining the modification to the Treasury Department,” Wilson said.

“Justifications commonly included claiming that the homeowner had failed to return requested documents or had failed to make payments,” he said. “In reality these justifications were untrue. I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a trial period plan and was entitled to a permanent loan modification,” but was nevertheless declined during a blitz.

“On many occasions, homeowners who did not receive the permanent modification that they were entitled to ultimately lost their homes to foreclosure,” he said.

After Bloomberg wrote last week about the former employees’ statements, the top Democrat on the House Financial Services Committee, Maxine Waters, sent a letter to Christy Romero, the special inspector general of the Troubled Asset Relief Program, asking that her office investigate. Yet it’s hard to get one’s hopes up about the government’s desire to get at the truth.

There already has been a $25 billion nationwide whitewash of a settlement between regulators and big banks over improper foreclosure practices, along with billion-dollar payments under a different settlement to consultants who were hired to review those practices. Nobody was prosecuted, much less wrist-slapped.

This week, the court-appointed monitor overseeing compliance with the terms of the national mortgage settlement said he found “more work needs to be done” by big mortgage servicers to improve their treatment of customers. But neither he nor the regulators have ever reported anything as dubious as the conduct described in the former Bank of America employees’ court declarations. Perhaps they just missed a bunch of stuff.

If there was a good reason to believe that the government’s priority is to investigate big banks rather than protect them, maybe Bank of America’s blanket denial would seem more credible.

 

By: Jonathan Weil, Bloomberg View, Published in The National Memo, June 21, 2013

June 23, 2013 Posted by | Big Banks, Foreclosures | , , , , , | 1 Comment

   

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