Courtesy of Pam Martens.
Senator Elizabeth Warren Questioning Bank Consultants at the April 11, 2013 Senate Hearing on Foreclosure Reviews
There is only one thing more Kafkaesque than the ongoing Wall Street frauds and that is watching a live United States Senate investigation of a diabolical settlement the banks themselves concocted to repay the victims of their own fraud. Such was the case yesterday when Senators Sherrod Brown, Jack Reed, and Elizabeth Warren grilled regulators from the Office of the Comptroller of the Currency and Federal Reserve along with outside consultants over allowing banks to hand pick the consultants to do their foreclosure reviews, negotiate confidentiality agreements with them and pay them directly.
Hundreds of millions of dollars in checks from the Foreclosure Review settlement will start going out today, eventually topping $3.6 billion in the cash portion of the settlement, and yet it was revealed during yesterday’s Senate hearing that it was the actual banks that engaged in the illegal foreclosure actions that tallied up and classified their wrongdoing under various degrees of harm; deciding themselves how many people would receive $300 and how many $125,000. The outside consultants that were hired to compute the harm were in the dark about this final, and most important, stage of the review process.
While two previous reports by the General Accountability Office (GAO) hinted at a sham settlement, questioning by Senator Warren of three of the highest paid outside consultants left no room for doubt:
Senator Warren: I just want to take a look at the Independent Foreclosure Review Payment Agreement details. I think you’ve probably all seen this one page agreement that lists all of the things that the banks did wrong and then boxes for how many people fall into each category and how much money they’re going to be paid. Is that right? You’ve all seen this? [Panel indicates they have seen it.] And this was put out – who put this out? I think this is put out by the OCC and Federal Reserve. Is that right? As part of the settlement details. So I just want to ask you about this. It has some pretty amazing categories here. The first category is about service members who were protected by Federal law whose homes were unlawfully foreclosed. It’s got people who were current on their payments whose homes were foreclosed. It’s got people who were performing all of the requirements under a modification who lost their homes to foreclosure. And it tells how many people fall into each category and how much money the people in that category will receive. And, it ultimately resolves what will happen to 3,949,896 families. So the question I have is having resolved this nearly 4 million families, who put the people, the families, into each of these boxes. Is that what your firms did. Mr. Ryan?
Owen Ryan, Partner, Deloitte & Touche LLP: No, Senator, we did not.
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