Today, to little fanfare, the Fed announced a major binding settlement with the banks over robosigning and fraudclosure, which benefited the large banks, impaired the small ones (which is great: room for even more consolidation, and even more TBest-erTF, which benefits America's handful of remaining megabanks), and was nothing but one minor slap on the banking sector's consolidated wrist involving a laughable $3 billion cash payment. As part of the settlement, the US public is expected to ignore how much money the banks actually made in the primary and secondary market over the years courtesy of countless Linda Greens and robosigning abuses. A guess: the "settlement" represents an IRR of some 10,000% to 100,000% for the settling banks. We are confident once the details are ironed out, this will be an accurate range.
Yet what is most disturbing, or not at all, depending on one's level of naivete, is the response of Elijah Cummings, ranking member of the house Committee on Oversight and Government Reform. As a reminder, Congress had demanded that the settlement not be announced before there was a hearing on it. This did not even dent the Fed's plans to proceed with today's 11 am public announcement which can now not be revoked. It is Cummings' response which shows, yet again, just who is the true master of the Federal Reserve.
Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, issued the following statement regarding the public announcement of a new settlement between the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and 10 mortgage servicers without first briefing the Oversight Committee as requested on a bipartisan basis last week:
“I am deeply disappointed that the OCC and the Federal Reserve finalized this settlement and effectively terminated the Independent Foreclosure Review process before providing Congress answers to serious questions about how this settlement amount was determined, who these funds will go to, and what will happen to other families who were abused by these mortgage servicing companies, but have not yet had their cases reviewed. I do not know what the rush was to make this settlement without answering these key questions, and although I look forward to obtaining information about how this deal may assist homeowners, I have serious concerns that this settlement may allow banks to skirt what they owe and sweep past abuses under the rug without determining the full harm borrowers have suffered.”
On Friday, Cummings and Oversight Committee Chairman Darrell Issa sent a bipartisan letter to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry requesting a briefing before any new settlement was agreed to or announced publicly.
The statement concludes as follows:
In calls to the agencies this morning, agency officials stated that they would not provide the briefing or answer additional questions before going public with the announcement of the deal.
And that, folks, says it all, although it should not come as a surprise to anyone who has by now realized that the only goal the Fed has is to boost the Russell 2000 to new record highs, instead of giving any part of a rat's anatomy about the US public or the broader economy.