We have all read about the numerous legal challenges that banks have faced.
Some
have paid billions of dollars on behalf of banks that they purchased in
2009 at the direct request of the US Government, for the actions of the
banks that failed. To re-iterate, as this is surreal, the President
lined up the CEO's of healthy banks at a meeting and specifically
requested that they purchase specific banks that were failing. The
economy was a day away from another Great Depression and the successful
banks did their good deeds and complied. But, the banks that they
purchased had engaged in subprime loans that were not illegal then - but
today are considered illegal lending practices.
So,
fast forward from 2009 to 2012 and the US Government and various US
Attorney General's began a slew of lawsuits against banks for the
practices of the former banks they purchased at the direct request of
the US Government to bail out the failing banks.
This
resulted in billions and billions of dollars in fines, settlements,
agreements and funded the US Government significantly. Various states
also got into the free for all and settled with banks getting billions
themselves.
While this was going on, Warren's
unregulated regulator - the Consumer Financial Protection Bureau - born
out of the Frank-Dodd legislation - began to hire individuals with no
mortgage banking, banking or any real life experience to..... yes to
regulate mortgage banking, banking and financial professionals.
And
this led to more regulations that in the eyes of many banks and other
groups have resulted in the closing of smaller lenders who can not
afford the increased costs to meet the regulations, the closing of
companies accused or found to have "violated" or been "sanctioned" for
immaterial items. As smaller lenders closed, larger lenders have grown
larger (the very thing the government and Sen. Warren rightfully did not
want to have - the "too big to fail" banks). And, lending constricted
because no one wanted to originate a loan that was going to be punted
back for immaterial issues unrelated to sound underwriting that resulted
in no harm to the consumer. Even JP Morgan announced they were
throttling back on government mortgage lending themselves.
Then
the US Government began to push for more lending because banks were not
lending (why anyone was surprised banks were not lending is curious).
They rolled out former Chairman Ben bernanke who said he himself was
denied on his mortgage (because he did not have the required two-years
of stable income as he had recently retired as Chairman - and those
rules were in place by the regulators and agencies run by the government
such as Fannie Mae and Freddie Mac - so again, no surprise.).
So,
banks again bended in return for the agencies (Fannie, Freddie, HUD)
agreement not to push back loans for immaterial findings. The banks
announced with great fanfare the new expanded criteria in lending that
really were just the old 97% LTV loans from the 1990's. And, in
response, HUD lowered their crushingly high mortgage insurance premiums
to lower the cost to get an FHA loan.
It would have been nice if it ended there.
It did not
Apparently,
NYS decided that Wells Fargo violated an agreement they signed and paid
into a 25 billion settlement (along with 4 other banks) regarding the
servicing of loans. The claim was that bank was not responding to some struggling
borrowers who were seeking loan modifications as quickly as timetables
under the settlement.
The Judge rejected this overreach by the government stating " does not require absolute perfection in loan servicing" and ruled for Wells Fargo.
It's
time that the public understand that banks lend money. People borrow
money. What occurred between 2000 and 2008 was the result of greed.
That greed was fueled by the US Government pushing banks in the 1990's
to lend more and more to people with lower credit standards, lower
income and to give them more borrowing power. And, the US Government
tied that to the Community Re-investment Act - the more banks lent to
those people the more CRA credits they got.
And,
let us not forget that even the New York Times in the mid-2000's
marveled how marginalized individuals got out of poverty and were now
millionaires - having obtained homes that increased in value, or
purchasing and fixing up run down houses that now were worth 2 and 3
times the amount invested.
And,
let us not forget that mortgage fraud then came about as greedy people
entered the mortgage business seeing a way to make a fortune and they
ruined it for everyone - the professionals in the business, the
borrowers, the banks - everyone. And, let's not forget that there were
many people on the street who were just as guilty as the get rich boys
and girls in the mortgage divisions of banks and mortgage bankers who
were not ethical in the least.
The
blame for what occurred can go from Bush and Clinton wanting to
increase the level of individuals who own homes, to wall street
investors looking to make a buck, to mortgage brokers looking to make a
buck to average Joe and Jill seeing a shot at making money through real
estate.
Consumers were not all victims. Bankers were not all bad people.
This Elizabeth Warren story line has to come to an end. People who do
not pay their mortgage should be foreclosed so that the banking industry
is able to recoup it's money and lend to the next person. Not everyone
in foreclosure was abused, used, ripped off and should gain our
sorrow. They may have seen a big house they could not afford and bought
it. Just as the lender should have better assessed their ability to re
pay, the consumer should have sat down and thought "hmmm......Do I need
the McMansion and the Suburban? Will I have enough for food after I
pay those payments?". They did not think that one out. Pretty basic.
So,
now we have NYS being slapped down in their attempt to, again, get a
payment from a bank for allegedly violating some new regulation put in
place to stop some practice that was A-Okay with the government when
they wanted the banks to lend lend and lend some more.
Now,
let's end it. Let's figure what part of the regulations need to go and
what parts need to stay and lets adjust it. And, lets educate the
regulators about life and the politicians about taking private sector
money to fuel government spending.
The
public should really ask - where did that settlement money go to that
the government got? I think in New York it went to re-build a bridge.
I am not sure how, if there were injured and harmed tax payers, that
the re-building of a bridge gets their homes back. Maybe I'm just
naive and dumb. But, it is not ethical and it is not fair and it needs
to stop.