In the wake of the “robo-signing” scandal — which involved the nation’s biggest banks approving foreclosures without ensuring due process for homeowners or even having the proper documentation — 50 state attorneys general, along with federal bank regulators and the Department of Justice, developed a settlement under which the banks would use tens of billions of dollars to modify mortgages, instead of having to litigate. The banks, predictably, are pushing back on the notion that they should have to pay anything for their mortgage malfeasance.
Bank of America CEO Brian Moynihan publicly whined that the settlement might involve his bank helping underwater homeowners, while other bank executives told Politico (anonymously, of course) that the settlement amounted to a “naked shakedown by regulators.” “How can [the Obama administration] be business-friendly and sign-off on something like this?” an executive asked.
House Majority Leader Eric Cantor (R-VA) this week criticized “fraudulent mortgage actors,” but instead of following his lead, other Republicans are parroting the banks’ rhetoric and standing in opposition to the settlement:
Sen. Richard Shelby (R-AL): Shelby called the proposed settlement “nothing less than a regulatory shakedown.” “Setting aside for a moment the attempt to end-run Congress, I question whether removing $30 billion in capital through a backdoor bank tax is the best way to jump-start lending,” Shelby added.
House Republicans: House Financial Services Committee Chairman Spencer Bachus (R-AL), along with four other members of his party, wrote a letter to Treasury Secretary Geithner that said “the breadth and scope of the draft settlement proposes raise significant concerns that the Administration and state agencies are attempting to legislate through litigation.”
As Credit Slips’ Adam Levitan pointed out, the Republicans are fundamentally mischaracterizing the settlement, particularly when they say that it is some backdoor form of regulation. “The banks have to decide if they would prefer to buy peace with the AGs or litigate. That’s the banks’ choice. And that means that claims that this is sub rosa regulation are ridiculous,” he wrote.
Republicans have regurgitated banking industry talking points before as justification for opposing help for troubled homeowners, and currently, House Republicans are trying to “pull the plug” on the administration’s foreclosure prevention efforts. Scaremongering about the proposed settlement — which, if anything, lets the banks off too easy — is simply one more indicator that Republican lawmakers in Congress are fundamentally uninterested in grappling with the foreclosure crisis.