State and federal regulators have yet to stop mortgage-foreclosure abuses and exact punishment on the banks responsible for them. A slap on the wrist for 14 of the largest mortgage firms, a still fruitless effort by state attorneys general to reach a settlement with banks, and superficial investigations into the extent of the abuses have done little to answer questions about the proliferation of mortgage fraud. Without that knowledge, regulators are at a disadvantage in arriving at an equitable solution.
Iraq veteran and U.S. Paralympic alpine skier Heath Calhoun, 30, walks past the new home that is being built for his family by the veterans group, Homes For Our Troops, and members of his community. (AP Photo/Kristin M. Hall)
Last week, the mortgage servicing arm of JPMorgan Chase reached an unusual settlement in a class action lawsuit, acknowledging it had charged illegally high interest rates and wrongfully foreclosed on 6,000 homeowners across the country. JPMorgan agreed to give $12 million to the individuals and $15 million to a fund for additional damages, on top of $6 million already promised for these particular violations.
On Wednesday, three federal regulators -- the Federal Reserve, the Office of Thrift Supervision, and the Office of the Comptroller of the Currency -- released an enforcement order against 14 of the nation's largest banks and two third-party service providers for persistent irregularities and outright fraud in the way they process mortgages. These regulators are, respectively, the gang that missed the housing bubble, American International Group's overseer (whose colossal lapses caused it to be disbanded in last year's financial-regulatory law), and an entity most recently headed by a former bank lobbyist.
This week, congressional negotiators will either reach an agreement on a continuing resolution for the 2011 budget or force the government to shut down. Even at a time when unemployment remains at an elevated 8.8 percent and a number of global concerns (the Japanese earthquake disaster, the European debt crisis, state budget cuts, and the depressed housing market) threaten the nascent recovery, Republicans will most likely succeed in cutting an additional $23 billion to the budget. Including the $10 billion already slashed in the two stopgap funding measures that were passed earlier this year, that brings the total to $33 billion, about the same level that House Republican leaders proposed before their most conservative members forced them to try to cut even deeper.