by Dwight Haskins
[Ed. Note: The following post comes courtesy of Dwight Haskins and is published with permission. Dwight discusses the company hired to insure that the big banks were properly reviewing their mortgage loan files. His post is one of corporate incest and ineptitude.]
Here is my nomination for what should be allowed to be a Qui Tam legal case and certainly should be candidate for biggest rip off of the year. Let’s look and see why and how the public was recently ripped off by a billion dollars or more. Where is Senator Elizabeth Warren when we need her?
I have been playing with Tableau analytics software and can see how it may have been able to save a billion dollars that should have been used to compensate homeowners harmed by actions by three large mortgage lenders. Instead, reportedly by Nakedcapital.com, a big bank consultancy in the nation’s capital, Promontory Financial Group, billed as much as a billion dollars for reviewing mortgage loan files at three large banks, following a decree-order to the banks, issued by banks regulators.
The consulting company has a cast of top government officials and chief bank regulators from each of the major government agencies. Its a “who’s who” of the big wheels who called the shots during the financial crisis. Staff and officers at Promontory include ex-chairmen of the OCC, FDIC, SEC, and top officials from the Treasury. It is surprising that there are still top officials left in these federal agencies.
The government, through the Comptroller of the Current, issues consent decree to the chief executive officer at Bank of America, Wells Fargo and PNC, requiring them to conduct an investigation of their mortgage loan files to help determine what borrowers experienced foreclosures or other significant harm due to improper actions by the banks.
Next, these banks do their own internal reviews to weed out the most egregious evidence of wrongdoing so that federal regulators and attorney generals are never any wiser as to what had occurred. Once that is done, the banks enter into contracts with a consultant to conduct the reviews in an attempt to show the reviews are independent and free from manipulation. In this situation, surprisingly, each bank selects Promontory Financial Group to conduct the reviews. Of course, Promontory does not have the expertise or manpower to conduct the reviews; so it goes out and hires contractors to perform the actual duties.
These individuals are given a few hours of training and then sent out to the banks to do the dirty work for Promontory at the request of the banks to appease bank regulators. Ironically, it was the bank examiners who were responsible for reviewing the mortgage loans files to begin with to make sure each insured bank was conducting its mortgage lending in a “safe and sound” manner. Because bankers have been able to “capture” the regulators over the past decade, each regulatory agency decided to “go easy” on the bankers by cutting way back on loan reviews to appease the bankers. Now, we have a better idea how the mortgage crisis was able to occur.
Heck, we thought it was bad how Haliburton was able to rip-off the government because of VP Cheney’s connections by having served as the head of that government contractor. Here, we have the same situation but instead of a defense contractor we have what is the world’s largest “white collar” government contractor. Any way one cares to look at it, a billion or so dollars — instead of going to the homeowners who were harmed by losing their homes because Wall Street banks carried out a type criminal enterprise — have been paid out to a bunch of bank consultants who failed to perform their assigned duties when they were bank regulators. The irony. It is the same as the government going to Bernie Madoff by paying him a billion dollars to find out which individual investors he stole millions from.
There ought to be some type of “clawback” of huge salaries and bonuses paid to ex-regulators who now are bank consultants. I write about “regulatory capture” and other major wrongdoing, including conflicts of interest by regulators in my recent book, “American Betrayal” by John Doe, whistleblower.
The bank fraud lawyers at Mahany & Ertl sue banks for wrongful foreclosures, fraud and other breaches of fiduciary duty. We are not a traditional foreclosure defense firm. Instead, we try to turn the tables on banks and sue them for their own wrongful conduct.
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