Wednesday, April 11, 2012

abusive and illegal standard operating procedures

abusive and illegal standard operating procedures

Update: When reading about how “our” government sold us the servicing standards as the big prize in the deal (along with the $25 billion that isn’t) even as they agreed the standards wouldn’t be meaningfully implemented or enforced, remember that the Consumer Financial Protection Bureau will be rulemaking on servicing during the settlement’s duration, with its rules set to take effect in 2013 and 2014, well before the 2015 expiration date of the deal. So the “standards” in this deal are even more useless than they otherwise appear.
On Thursday, April 5th U.S. District Court Judge Rosemary M. Collyer announced she had decided to sign off on the “$25 billion” Mortgage Settlement. By “announced”, I mean she signed the consent orders all our major law enforcers and the biggest bankers had agreed to, and entered them into the record. Judge Collyer didn’t actually say anything about the deal. She didn’t let anyone else say anything, either: she didn’t hold a public hearing on the deal.
In acting silently, Judge Collyer not only okayed the deal’s lousy terms, which institutionalize servicer theft and foreclosure fraud, she reinforced the incredibly poor public process that’s kept the enforcement fraud at the heart of the deal hidden. Deliberately hidden.
Magical Misdirection
To understand just how deceptive “our” government and “our” law enforcers have been with us, imagine them as a Shakespearean magician, confessing his thoughts to us as he tries to trick an audience seated just off stage. Hear the magician, as he secretly pleads for his misdirection to work:
‘Please, keep focused on this hand, the one with the wand waiving above the shiny new servicing “standards.” Pay no attention to what I’m doing with my other hand. Please don’t notice me transforming the “standards” into empty promises through the ‘magic’ of metrics.
I must succeed at controlling and guiding your attention, so you fall for my trick! Otherwise, my trick is obvious-my ‘magic’ is all there in black and white, in Exhibits E and E-1. So don’t look there…stay with me, stay focused on the new servicing “standards” and that big sounding “$25 billion”…
Think I’m overstating the deliberate deception in selling the Mortgage Settlement as something other than the enforcement fraud it is? Let’s review the history.
Keeping People Focused on the Servicing “Standards”
From the very beginning, the initial deal announcement a year ago, the government tried to sell the premise of the sleight-of-hand to come: Tough law enforcers, banding together, would force the bankers (wearing their mortgage servicing hats) to transform their abusive and illegal standard operating procedures into the basic, ‘thou shalt follow the law and deal fairly, in good faith’ standards ultimately embodied in Exhibit A. Here’s how the Washington Post presented what was happening on March 7, 2011:
“The state attorneys general investigating abuses in the mortgage servicing industry said Monday that as they hammer out details of a massive settlement with banks, their main objective remains fixing a system that has subjected consumers to confusion and financial strife.”
What we’re really trying to do is change a dysfunctional system,” said Iowa Attorney General Tom Miller, the point man for a 50-state effort.” (bold mine)

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