There are some strong statements being made by many in the financial sector – and they’re not mincing their words. They have very definitive ideas about what should happen to bank executives who allowed robo-mortgage activities to continue. One analyst called it a “near certainty” that Wall Street executives “committed felonies”. It’s all coming down to recently completed audits that have been made available by the Department of Housing and Urban Development (HUD).
The audits uncover disturbing decisions made by five of the nation’s largest mortgage servicers. In one instance, a high ranking manager at Wells Fargo halted and then demanded a study be destroyed that broke down the foreclosure process as it became clear the negative findings were about to cause big problems. One vice president of loan documentation was put in charge of facilitating robo mortgaging. He had to leave his current job as a pizza delivery guy in order to accept his new job.
Bank of America isn’t looking much better, either. Its evaluation process of employees was based on the volume of foreclosures they pushed through. Other banks were found to have hired their own vice presidents whose only jobs were to serve as a face that mortgage holders saw when they were signing documents that allowed the foreclosures to move forward.
Perjury and Felonies
What makes this so alarming, and the reason many say the bank executives have committed felonies, is based on a federal law that says filing a false affidavit is considered felonious perjury and is punishable by a prison sentence of up to five years. Of course, individual states have their own distinctive perjury laws and there’s little doubt that the state laws were violated in the process. The HUD report also suggests that individual banks may be guilty of obstruction of justice and the criminal violation of the False Claims Act for filing insurance claims outside the compliance requirements set forth by HUD.
It’s important to keep in mind that up until now, there have been many federal officials that have sought to make deep changes on Wall Street, but with little – if any – success. Crazy as it sounds, those same experts say this latest report won’t likely result in any substantial changes either.
Narcissism and Immunity
So what now? There’s no doubt the American consumer is going to remain quiet for a very short time before these reports begin making the rounds. Once that happens, how will the various agencies justify the immoral – and certainly the illegal – brouhaha surrounding the robo signing crisis? There are simply too many signs that say this criminal activity will go unprosecuted.
Not only that, but Wall Street executives say (and have every time something like this happens) that they are immune to both the rules of the game and any prosecutorial efforts on any level. And if anyone doubts that, take a look at the growing narcissism on Wall Street. Even as the robo signing crisis continues to unfold, there are illegal and unethical activities that continue, including the recent annihilation of MF Global.
A Look to the Past
There are more than a few folks who are looking to the efforts made during the Great Depression and the investigation into the 1929 crash. Things had become so convoluted and the nation was divided into two sets: the Wall Street executives and the American public. Things were bad and the only solution to bring the nation together again was to knock the executives down a notch or two from their respective pedestals.
The Pecora Commission comes to mind. It was only then that things began to change. Americans not only were beginning to trust both the political and financial sectors were once again working in their favor (as it should) but there was an incredible wave of support for President Roosevelt. What makes this so important is that the Securities and Exchange Commission was founded and the Glass Steagall Act was finally passed, which established the Federal Deposit Insurance Corporation.
This Act included four primary provisions, including one that significantly limited securities activities in banks and really changed the way banks dealt with each other as well as various securities firms.
By the time the 1990s rolled around, Glass Steagall had been restricted to the point of being useless and many point to Citibank’s dealings with Salomon Smith Barney. They eventually partnered.
So will it take drastic measures? Most likely. Will it happen overnight? Not in a million years.