Senate Hearing Over Fraudclosure Begins: Live Webcast, And Relevant Ted Kaufman Thoughts

Live coverage of the Senate Banking Committee's make believe grilling of Bank of America representative Barbara Desoer over fraudclosure starts live at 3:15pm, or was supposed to: just like the EU Press Conference, it is also late.

As a reminder here is a list of the participants:

  • Honorable Tom Miller
    Attorney General
    State of Iowa
  • Ms. Barbara Desoer
    Bank of America Home Loans
  • Mr. David Lowman
    Chase Home Lending
  • Mr. Adam J. Levitin
    Associate Professor of Law
    Georgetown University Law Center
  • Ms. Diane E. Thompson
    National Consumer Law Center
  • Mr. R. K. Arnold
    President and CEO
    Mortgage Electronic Registration Systems, Inc

The live senate webcast can be seen here, while a much better quality webcast via CSpan can be seen after the jump.


And for those who couldn't care less about the asshats in the clip above, here is one actually relevant, and informed opinion, belonging to the new Chair of the Congressional Oversight Panel, Ted Kaufman, which will appear in a full interview to be aired later today on Fox Business. Here are the key points from the upcoming interview:

On how the Congressional Oversight Panel thinks the Treasury could be more effective:

“We think they should stress test the banks. There's probably a small probability that something really bad could happen but we do want to be prepared for that. We also think that they should be looking over Fannie Mae and Freddie Mac to see what the impact on that should be. And then just keeping faith in the housing market, as I said before, making sure that every American is getting due process.”

On what they are asking the Treasury to focus on:
“There's an old economic, engineering term called expected value.  Even if there's a small probability of something happening but it's really, really, very, very bad, you really should look at it very, very seriously.  And that's what we're calling on Treasury to do. Treasury is doing its job.  The federal government, they've got task forces looking into this but we just felt it was important to really stress this and layout, as I said before, some of the things we think they should be doing, including stress tests.”

On the reasons the Oversight Panel created this report:
“For Americans out there, whether they're getting due process; who owns their mortgage and how all that works is a big problem. Number two is the financial stability of the banks. This could be a real threat to the financial stability of the banks. And three, Treasury has a $30 billion mortgage modification program and what are the impacts on that.  We still have a housing problem. But hopefully we're going to get the housing problem turned around and this could be a real problem to stop that if we don't get on top of that.”

On whether housing problems still exist:
“Essentially banks are saying they don't have a problem.  They've called off the foreclosure moratorium that they had in place.  And they're moving ahead and they say there's no problem.  The overwhelming consensus in the financial community is that this is all ok. I want Treasury to look into this.  We talked to Treasury.  I think they are going to look into it. There's a number of scenarios that could work out very badly for the mortgage market and for individual Americans.”

On whether robo-signing is leaving mortgages in limbo:
“Clearly that's a problem.  I mean, that's out there.  But the robo-signing could make this all very, very difficult.  The fact that thousands of people were signing foreclosure documents, they didn't know what was in them is really scary.”

On the fact that only 467,000 foreclosures have prevented:
“We really count on Treasury to monitor this closely.  Phyllis Caldwell from Treasury said they think they've got it under control.  We just think that this should be really looked into.”

On what the Treasury is missing in regards to Fannie and Freddie:
“One is the whole robo-signing, mass documents, who owns the mortgage is a big deal. The other thing with Fannie and Freddie is this whole put back issue. You've followed with the New York Fed and PIMCO asking for $49 billion back from Bank of America based on put backs.  And, of course, Fannie Mae and Freddie Mac have both been asking those things, too.”

On how the ambiguity of who owns these mortgages is a problem for homeowners:
“Historically what you do is you could go into your local banker and if you want to modify your mortgage, you want to increase it, you want to pay off early, there's somebody you can talk to.  Now people don't have someone to talk to because they're not quite sure who owns the mortgage.”

On whether it is possible that we may never know who owns some of these mortgages:
“That's one of the very small probability, very worst case situation. That could be a very, very serious problem. Because if you don't own the mortgages then you can't go to foreclosure.  And to the extent that banks have money tied up in these mortgages, especially ones people haven't paid for them in a long time, it could be an incredible drain on bank assets and we know banks are still just recovering from the last financial problem. This could be a very major problem in terms of recovery of the banks and therefore the recovery of the financial system and jobs.”

How much taxpayers will be responsible for as a result of all the bad mortgages:
“I have no idea. I'm the Chair of the Congressional Oversight Panel and the TARP and our main thing is to oversee Treasury.  Over $700 billion was originally put in for TARP and CBO says now it looks like the estimate is around $66 billion. So from that standpoint, this program's turning out to cost a lot less than we thought.  A lot of that depends on how the IPO comes out of General Motors and this mortgage program and problems like this.”

On the financial risk to major banks:
“Under the worst scenario this could be a very serious problem for our major banks.  In the Dodd-Frank bill there's resolution authority to deal if we get into a real problem.  But that's never been tested.”

On whether they should have set aside assets rather than infusing the banks with money:
“I think there's a very good argument for that, looking back on it. We're pretty much far down the road.  TARP has really been closed on October 3rd. They can't change what the basic program is that treasury's doing, so we're pretty good.  It's going to be a very interesting question about what we did and whether we did it the right way or not.”