Regulators continue to fluff the bank CEOs’ pillows. From Crooks and Liars:
The head of one of Wall Street’s most important regulatory agencies argued recently that big-bank CEOs never intended to break the law or engage in foreclosure fraud. Instead, Thomas Curry of the Office of Comptroller of the Currency tells us they weren’t cautious enough.Internal documents obtained from a bank-backed venture several years ago seem to directly contradict this claim. These documents, which include training materials, PowerPoint presentations and videos, suggest that the industry made a conscious attempt to bypass local jurisdictions and automate processes – in what can best be described as a fraud-friendly way.
As Comptroller of the Currency, Curry runs one of the agencies charged with keeping our banking system safe, ethical and crime-free. It’s not an enviable task, but it’s critical to the safety of our economy. So it should have received more attention when Curry wrote in an industry publication that Wall Street suffered, not from a shortage of ethics, but from an inadequate “risk culture.”
Curry’s perspective differs markedly from those of leading figures like William Dudley, President of the Federal Reserve Bank of New York, who said last year that ”there is evidence of deep-seated cultural and ethical failures at many large financial institutions.”
“The problems that have come to light in the years since the financial crisis may not have been the result of conscious decisions on the part of senior management. I doubt, for example, that any large bank chief executive officer called together his senior executives and said, ‘Foreclosure paperwork is too time-consuming. Let’s start robo-signing the documents.’”
Unfortunately, that statement appears to be incorrect. Documents obtained from an industry-wide venture reveal that the nation’s leading mortgage lenders colluded to create a false-front company, driven by a back-end database, specifically for the purpose of bypassing local jurisdictions’ taxes and filing requirements. These banks were later to hire low-paid temp workers specifically to process foreclosures. (JPMorgan Chase called them the “Burger King kids.”)
The banking industry’s epidemic of mortgage-related fraud might not have been possible without the existence of the legal entity known as “MERS.” MERS – Mortgage Electronic Registration Systems – made it possible to bypass local processes for recording changes in title and loan ownership by pretending that these mortgages were held by this artificial legal creation.