David Dayen: GAO Report on Independent Foreclosure Reviews Exposes OCC, Fed’s Plan to Deliberately Minimize Evidence of Borrower Harm
By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen
This morning the Government Accountability Office released their second report on the Independent Foreclosure Reviews. Kudos to Rep. Maxine Waters for getting GAO to take another look. At the time that the OCC and the Fed scrapped the reviews and amended their consent orders, this review, expected to be critical of the process, was seen as a proximate cause.
Rep. Brad Miller, a North Carolina Democrat, told The Huffington Post that the report, which has not been released, was “critical” and that the Office of the Comptroller of the Currency, which administers the review, was aware of its findings. Miller said that that one problem the GAO was likely to highlight was an “unacceptably high” error rate of 11 percent in a sampling of bank loan files.
That indeed is in the report, though I wouldn’t call it a major feature. And there are only a few big bombshells or pieces of corroboratory evidence in the report. Furthermore, its narrow scope – GAO only looked at the regulators’ design and ovesight of the foreclosure reviews, rather than what the independent reviewers did, and in fact they used the bank consultant reviewers as primary sources – tends to give a very circumscribed picture of the reviews. You could even say that this report will help get the bank consultants off the hook by putting the blame on OCC and the Fed.
But the regulators were definitely part of the story here, and once you get through the government audit-ese, you can begin to see the picture of how they conspired to ensure the reviews would offer little to no value, and indeed attempt to exonerate the banks. The ensuing calamity only shows how the scheme worked too well, burying any evidence of borrower harm among an avalanche of deliberately cracked design.
Copy of the report below…