Former FDIC Chairman Sheila Bair On Foreclosure Lookback ReviewsBy Francine • Oct 27th, 2012 • Category: Food for Thought, Pure Content
I wrote something for Forbes last week on Sheila Bair’s involvement in the negotiations that led to the April 2011 consent orders for the foreclosure reviews and, therefore, to the $25 billion state Attorneys General mortgage settlement. Chapter 21 of her book, “Bull By The Horns” is a blow-by-blow account of the wrangling and dealmaking that resulted in two settlements that satisfy neither consumer advocates nor the borrowers that were harmed by abusive mortgage servicer activities.
I haven’t written a full review of her book because, honestly, I have not finished it yet. After two others recently like it – The Payoff by Jeff Connaughton and Bailout by Neil Barofsky – I’m a little weary of bailout books. But I will finish Bair’s book. From what I have read so far, it is worth finishing and it is worth writing more about. Bair, Barofsky and Connaughton are three critics of the bailout and the managing of the financial crisis by both administrations with the credentials, and the guts, to back it up with on-the-ground observations.
It’s not so “crazy” anymore to say that the bailouts didn’t meet the stated objective of helping homeowners stay in their homes or to question the numbers when mission accomplished is claimed for “saved” companies like GM and AIG. Their critique is also bipartisan – Bair is a lifelong Republican and Connaughton and Barofsky, as Democrats, reluctantly criticize the Obama Administration and Treasury Secretary Tim Geithner, in particular. In fact, Tim Geithner’s guile is one of several things all three seem to agree on.
From my Forbes column on Bair and the foreclosure reviews:
The OCC/FED consent orders signed in April 2011 fall short, in Bair’s opinion, in three big ways:
- No hard metrics that can be used to measure improvement in servicing borrowers legally and efficiently.
- Treat all the servicers the same, even though there are huge difference in size and quality of operations.
- Allow banks to use well-paid consultants to calculate damages to borrowers and to base the calculations, in many cases, on sampling not a full review of each borrower’s case.
It’s the last point which is has proved to be especially insidious. I agreed with Bair’s assessment of the entire process – it’s a ruse and a waste of time and money – in a recent American Banker BankThink column.
Read the rest of, “Sheila Bair Called It – Foreclosure Lookback Reviews Are A “Ruse””, at Forbes.com.