Reform Suggestions for the Rogue Regulator, the OCC, and its Partner in Crime, the Shadow Regulator Promontory Group
As a follow up to our series* on how Bank of America and its supposed independent consultant Promontory Financial Group, colluded to make a mockery of a process designed to provide compensation to borrowers who had suffered abuses in foreclosures during 2009 and 2010, we thought we would offer a few suggestions as to how to forestall future fiascoes of this sort.
Recall that when the OCC set forth what was later called the Independent Foreclosure Reviews, it envisaged that the process would be carried out by independent consultants. However, that process is well known by those who care about the public interest, as opposed to the interest of banks, to be hopelessly corrupted when the party who is supposed to be subject to tough scrutiny is choosing the consultant and writing the checks. And that’s before you get to the wee problem that large banks are very lucrative clients. Even a party that was not retained by the bank might well want to use a consulting gig to cultivate a relationship with it.
This problematic practice is made worse by the special role that Promontory has carved out in the financial services industry. The firm operates as a shadow regulator.** Promontory’s founder and CEO Gene Ludwig was Comptroller of the Currency under Bill Clinton; it was then that installed its recently departed chief counsel, Julie Williams, who was firmly ensconced when the consent orders were being negotiated. Williams, having been deeply involved in designing a process that insiders estimate earned Promontory $1 billion in gross fees across three clients, then went from the OCC to Promontory. And, bringing the revolving door to a new level, a Promontory staffer, Amy Friend, took her place at the OCC.