Fed Board Couldn't Be Bothered to Vote on Multi-Billion Foreclosure Settlement

The foreclosure fraud settlements were already farcical, but it just gets worse and worse. Now we learn that the Fed approved the amendments to its consent orders with mortgage servicers without it actually going before the Board of Governors for a vote.  

I get that Fed regulations permit delegation of this sort to the Fed's staff, but the foreclosure fraud settlement wasn't some Mickey Mouse enforcement action against a community bank's holding company for a minor know-your-customer rule infraction. As far as I'm aware, this was by far the largest settlement of any sort in the Fed's history. This settlement was a policy statement as much as an individual settlement. The fact that the Fed's Board didn't even bother formally deliberating and voting on the settlement is indicative of how seriously the Fed's Board takes the foreclosure fraud issue:  the Board doesn't think that it's worth their time.  Not even a single Board member requested review of the action. Yet another exhibit for why consumer protection cannot be left in the hands of prudential bank regulators. 

Comments

[MATT WEIDNER]

DON'T WORRY....the attorney generals have it all under control....they're protecting the people....aren't they?

[Richard Davet]

Nothing new.................only unreported history.

How many times were the American Indian Treaties violated?

This is all an ongoing scheme called " The GSE Business Model", in which all involved must participate today to cover it all up.

[Kelly A]

Typical and standard operating procedure, read Sheila Bair's book Bull by the Horns. The FED's lack of regulatory backbone is part of how the mortgage crisis came to be to begin with...too busy protecting the TBTFs.

[Nick Firoozye]

Too many economists? Not enough lawyers?

Oh, ask an economist what a risk free rate is.....then go ask a lawyer! Why should economists be making any of these decisions?

[joe bongiovanni]

Imagine the options.
This.
Or having the Federal Reserve Board sit down and consider in open(to be) session the actual terms of the settlement under consideration.
Accountability and responsibility ain't us.
There was no need to tell any of the Board members why not to request a review of the situation. At any point. Ever.
The survival of the banking system prevails.
And thus, the Fed itself continues.
Central bank independence has many dimensions.

[John Roehling]

Perhaps willful inattention is also indicative of a largely unreported concern for (we) former homeowners receiving IFR or NMS compensation checks from either the review administrator or the AGs.

Two issues arise that nearly all of us have never faced: first, what really is the tax status of this compensation and secondly, how does the average recipient protect their award, taxed or no, from follow-on attacks by the same crooks who were forced to give it?

The official websites offer nothing other than oblique and superficial non-information usually ending with "...consult your tax professional..". As if we had one.

To the first issue, tax status: one theory holds that because these are settlement checks, as compensating the victim, are not some kind of a windfall, they should be treated as such; tax free or the offender picks up the tab. On the other hand, general rumor may be that someone (the offending banks?) plan to issue forms 1099-misc to the IRS. What is this, punishment to the homeowner over forcing payment of a pittance for the devastation inflicted? Wilder yet, the rumor that the offending institutions are allowed to write-off the compensation checks on their own tax returns. Can this be true?

The theory above, that the awards are tax-free, is just and if necessary has to be fought for; but how and where? The rumor above is odious. If the case, wow, the victims all become tax dodgers right in company with the crooks that executed the robbery. Suddenly the least amongst us have a tax problem? If this is the "problem", damaged homeowners need common tools to fight it without resorting to tax attorneys and accountants that would wipe out the award before they even started.

Raising the alarm of possible 1099's to my congressional delegation, I asked if mine was the first one they’ve heard. Not really, was the reply. Perhaps there is a real possibility for legislative intervention or a court challenge? Is there? If so what kind of common support to those efforts can we effectively apply?

To the second issue facing aggrieved homeowners; other than bankruptcy discharge, for awards of any meaningful size we now become a people in need of “sheltering” our compensation from the same victimizers that were forced to pay us using whatever legal actions they can concoct; deficiencies, credit cards or other sundries. We now have some money to be gotten. Most of us have never contemplated we would arrive at needing this. See the scams coming?

Homeowners need transparent, public and national defenses for tax protection if taxed, and the same for insulating our awards from the bloodthirsty. Perhaps already a credibly effective push-back is in the works to either shift any tax burden back to where it belongs or at least relieve the homeowner from being the target of any 1099's sent to the IRS. As for compensation protection, perhaps retirement accounts or other other legitimate places can be shown to put our awards beyond jeopardy from any entity looking to cull the wreckage of our lives for anything they might profit from. Other than the limited guards offered by IRAs and such, the world of asset protection appears dangerously nefarious. See more scams coming?

There are a lot of questions herein that probably require time-consuming journalism. If I may speak for millions, can the contributors to this site give us without deflection some considered answers?