The “Foreclosuregate” scandal is widening and threatens the superstructure of the housing finance industry. Attorneys General from all 50 states are opening a joint investigation into the fraudulent use of false documents and signatures to justify hundreds of thousands of foreclosures. There can be no doubt that very senior executives will be facing subpoenas, depositions, and potential criminal investigations.
And maybe that’s why Bank of America, JPMorganChase, GMC Mortgage, and their trade association, the American Bankers Association, spent so much money and time in the past year to enact federal legislation which would prevent any such lawsuits and compromise our rights enumerated in the 7th Amendment. They lobbied Congress hard every day, spending millions of dollars in lobbying expenses and political contributions, to enact provisions in the financial regulatory reform bill to preempt state law and immunize themselves from state court suits by the state Attorneys General and consumers. It’s not hard to imagine – If top bank officials knew that thousands of my bank’s foreclosures were phony and rushed through the process, they would want to jump into the Dodd-Frank bill process to kill those lawsuits before anybody could find out the truth in court. Fortunately they didn’t get the total immunity from Congress that they sought.
The state Attorneys General should pursue that angle in their “Foreclosuregate” investigations and determine whether top officials – the CEOs included – pursued changes in federal law because they knew or had some suspicion that the tsunami of phony foreclosures would soon become publicly known.