Courtesy of Pam Martens.
The $3.6 billion in checks from a government approved settlement fund for victims of foreclosure abuse by the country’s biggest banks and mortgage servicers began arriving in mailboxes this week, with additional mailings to extend into July. But what should also be tucked into the envelope is a truth in advertising disclaimer stating that the government is now disavowing the use of the phrase “Independent Foreclosure Review” as a hyperbolic and untruthful characterization. The process was anything but “independent” and out of more than 4 million foreclosure files potentially stuffed with evidence of illegal activity on the part of banks, only 100,000 files were actually reviewed, not even enough to constitute a reliable statistical sampling.
In a Senate hearing last Thursday, Senator Elizabeth Warren revealed for the first time that it was the actual banks that engaged in the illegal foreclosure activities, not the so-called Independent Foreclosure Review consultants, that were allowed by the government to tally up and classify their own wrongdoing under various degrees of harm; deciding themselves how many people would receive anywhere from $300 to $125,000 in restitution.
The Government Accountability Office, which will send a witness to testify before a second Senate hearing on the matter this Wednesday, has issued two reports casting the process as botched and deeply flawed. But neither of those reports factually captures the depths of the settlement scam.
In the engagement letter dated September 6, 2011 between Bank of America and Promontory Financial Group, the “independent” consultant it hired to conduct its foreclosure investigation, Promontory attested to regulators that: “Promontory does not have an ongoing relationship with BAC [Bank of America], nor does it act in any advocacy capacity on its behalf.”
The veracity of that statement is severely undercut by public records. While it was denying any ongoing relationship to regulators, Promontory actually had a large scale re-branding and turnaround contract with Bank of America that had been in place since May of 2011, four months prior to its engagement letter to conduct a government investigation into the bank’s foreclosure abuses.
According to its own web site, Promontory had been hired by Bank of America for a two-phase project stretching from May 2011 through April 2012 to help the company “better serve the bank’s shareholders” and to shave $8 billion in expenses through cost reductions. Translation: fire 30,000 employees. The Promontory business unit conducting the program is called Promontory Growth and Innovation. It labeled the assignment, Project New BAC. (BAC is the stock symbol for Bank of America.) Could a consultant effectively manage the conflict of rebranding a company’s image and helping it with a massive cost reduction program while simultaneously handing it the bad news that its internal investigation showed that it owed billions in restitution to foreclosure victims it had illegally thrown out of their homes. Clearly, this is one too many hats for a consultant to attempt to wear.
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