U.S. Senator Elizabeth Warren is mad as hell and she’s not going to take it anymore.
Of the chorus of voices speaking out against Wall Street, Warren’s is the loudest – and likely the most important. This time she’s trained on the botched $25 billion mortgage abuse settlement reached between the Department of Housing and Urban Development (HUD) and the five big banks.
Warren recently sent a letter to Attorney General Eric Holder demanding answers and castigating the Department of Justice (DOJ) for allowing sleazy lenders to get off so easily. Her dismay primarily stems from the fact that a scant $225 million was paid to the Federal Housing Administration (FHA) for releases from False Claims Act liability.
According to the False Claims Act treble damages clause, the lenders ought to have been on the hook for as much as $37 billion.
Thus, the DOJ accepted a paltry 0.6% of the total possible damages as a payoff for a get-out-of-jail-free card.
In addition, no senior executive of any of the big banks has been criminally prosecuted for wrongdoing during or after the mortgage meltdown and financial crisis which they primarily brought on.
Warren is concerned the settlement is indicative of the government’s timid approach to enforcement. Instead of substantive and proper penalties, the settlement kowtows to the too-big-to-fail financial institutions which engineered this mess.
With just months to go before Congress addresses the FHA’s fiscal future, Warren wants to know:
- how the DOJ arrived at their decision to accept the $225 million;
- what research, if any was done, to determine the total cost to taxpayers of the big banks’ fraud; and
- how much of the $225 million has actually been deposited in the FHA’s reserve account.
first tuesday insight
Warren is the fly in Wall Street’s ointment, the proverbial mosquito buzzing in its ear.
One might argue sending snarky letters and badgering regulators at committee hearings is mere grandstanding — political performance art at its best. But regardless of any headway Warren makes, her presence as an outspoken critic of Wall Street and government collusion against homebuyers is priceless.
Let’s put things in perspective. Historically, the top advocate for real estate professionals has been the NAR/CAR trade unions. In fact, all Realtors pay top dollar for their so-called “advocacy.”
However, the trade unions’ interests have been aligned with Wall Street’s since before the advent of the mortgage-backed bond — you provide the financing, we’ll find the buyers.
The collusion between the two can be clearly seen today in NARs trumped-up real estate sales data, which is always points higher than the Case-Shiller Home Price Index and first tuesday’s home sales volume numbers.
As the trade unions continue to pander to Wall Street, and Wall Street continues to be too big to fail, honest real estate professionals need a bulldog like Warren barking for them.
Right now she’s fighting for the FHA, which means she’s fighting for you!
Re: “Elizabeth Warren presses Eric Holder on mortgage settlement” from the Huffington Post