[Congressional Record (Bound Edition), Volume 158 (2012), Part 1]
[House]
[Pages 1067-1068]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             HOUSING CRISIS

  The SPEAKER pro tempore. The Chair recognizes the gentlewoman from 
Ohio (Ms. Kaptur) for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, it's over time for Wall Street megabanks, 
their CEOs, speculators, and sharpies to come and scrub the floors of 
homeless shelters across this country that are crammed with people who 
have lost their homes. Let's make those Wall Street bankers sign up to 
work with Habitat for Humanity to restore housing in neighborhoods 
across our Nation. Wouldn't that be sweet justice? Once they've paid 
back the billions that they owe the American people, whose homes 
they've raided of equity, let's put them to work.
  Wouldn't it be great to see the CEO of Goldman Sachs, I think his 
name is Lloyd Blankfein, out there with buckets and scrub brushes? Come 
to Toledo; come to Cleveland; come to America, the part you've hurt so 
deeply. Wouldn't it be great? Let him be joined by Josh Bolten, who was 
there when the Bush administration handed the toxic mortgage paper to 
the people of the United States.
  Well, come on down, Angelo Mozilo, from Countrywide. I think a little 
hard work would help you a whole lot. How about Bank of America? How 
about the CEO there? How about JPMorgan Chase? How about Jamie Dimon? I 
wonder when was the last time he scrubbed a floor. How about Jim 
Johnson, who headed up Fannie Mae, or Hank Paulson? Oh, I'd love to see 
this.
  As I speak, coming to light are important developments in the much 
anticipated settlement between the individual State governments and the 
big Wall Street banks over the widespread use of fraudulent schemes and 
missing paperwork that fueled the foreclosure crisis. As the press has 
reported, we are seeing the possible imposition of $25 billion in 
penalties against Wells Fargo, Bank of America, JPMorgan Chase, Ally 
Financial and Citigroup. Given the extent of the damage they caused, 
it's a small start. Just in Ohio, the financing gap was $20 billion. 
That's what it would take to stabilize the housing market in just our 
State.
  Most importantly, The New York Times is reporting that the deals will 
``preserve the right to investigate past misdeeds by the bank.'' Not 
one, not even the titans of Wall Street, should be able to buy legal 
immunity for their criminal acts as millions of families lose their 
homes.
  It is important that we do not forget how systemic mortgage fraud has 
become. In an interview given by a former executive vice president of 
Countrywide Financial, a giant player in the U.S. mortgage business, 
this executive who was in charge of fraud investigations at the company 
related how ``Countrywide loan officers were forging and manipulating 
borrowers' income and asset statements to help them get loans they 
weren't qualified for and couldn't afford.'' She went on to say that, 
whenever we looked through all of the recycle bins, they were full of 
signatures that they had

[[Page 1068]]

cut off of one document and put on another and then photocopied or 
faxed. According to her, the fraud was systemic, taking place in 
Boston, Chicago, Miami, Detroit, Las Vegas, Phoenix and, I can tell 
you, Cleveland, Parma, Lorain, Elyria, Toledo, and Sandusky.
  What we cannot forget is that these stories are not isolated. The FBI 
testified before Congress as early as 2004 that they were seeing an 
epidemic in white collar financial crimes, and they did not have 
anywhere near enough agents to go after the wrongdoers. Wasn't that 
convenient? While the number of agents has increased due to 
congressional pressure, the FBI needs to have more special agents and 
forensic experts to properly investigate the level of accounting 
corruption that is believed to exist.
  This is the most basic, bipartisan concept I can think of, that 
criminals cannot be allowed to get away with their crimes because our 
law enforcement agencies lack the manpower to stop them.
  I have a bill I hope my colleagues can support. It is H.R. 3050, the 
Financial Crisis Criminal Investigation Act, that would authorize an 
additional 1,000 FBI agents to take on the kinds of fraud that have 
destroyed the economic futures of countless American families and so 
gravely harmed our Republic. A good first step was the inclusion of 
more than 200 additional agents in the last appropriations cycle. This 
administration should use it to go after these Wall Street 
perpetrators.
  The President announced during his State of the Union address a new 
working group to look into mortgage fraud. It will coordinate efforts 
between the FBI, the Justice Department, and various States to go after 
those on Wall Street who have perpetuated fraud in the markets, using 
mortgage-backed securities, collateralized debt obligations, and lots 
of other sophisticated financial tricks.
  Given the seriousness of the fraud, the number of American families 
that have lost their homes and savings, and the drag that that 
foreclosure crisis continues to have on the economy means we need more 
vigilance and let's confront Wall Street, and put the perpetrators in 
jail. And let's have them scrub floors in this new year.

                [From the New York Times, Feb. 5, 2012]

           Deal Is Closer for a U.S. Plan on Mortgage Relief

                (By Shaila DeWan and Nelson D. Schwartz)

       With a deadline looming on Monday for state officials to 
     sign onto a landmark multibillion-dollar settlement to 
     address foreclosure abuses, the Obama administration is close 
     to winning support from a crucial state that would 
     significantly expand the breadth of the deal.
       The biggest remaining holdout, California, has returned to 
     the negotiating table after a four-month absence, a change of 
     heart that could increase the pot for mortgage relief 
     nationwide to $25 billion from $19 billion.
       Another important potential backer, Attorney General Eric 
     T. Schneiderman of New York, has also signaled that he sees 
     progress on provisions that prevented him from supporting it 
     in the past.
       The potential support from California and New York comes in 
     exchange for tightening provisions of the settlement to 
     preserve the right to investigate past misdeeds by banks, and 
     stepping up oversight to ensure that the financial 
     institutions live up to the deal and distribute the money to 
     the hardest-hit homeowners.
       The settlement would require banks to provide billions of 
     dollars in aid to homeowners who have lost their homes to 
     foreclosure or who are still at risk, after years of failed 
     attempts by the White House and other government officials to 
     alter the behavior of the biggest banks.
       The banks--led by the five biggest mortgage servicers, Bank 
     of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally 
     Financial--want to settle an investigation into abuses set 
     off in 2010 by evidence that they foreclosed on borrowers 
     with only a cursory examination of the relevant documents, a 
     practice known as robo-signing. Four million families have 
     lost their homes to foreclosure since the beginning of 2007.
       As recently as two weeks ago, with federal officials hoping 
     to complete a deal that President Obama could cite in his 
     State of the Union address, California's attorney general, 
     Kamala Harris, made it clear she was not on board, terming 
     the plan inadequate. But in the last few days, differences 
     have narrowed in negotiations that one participant described 
     as round the clock, with California officials in direct 
     communication with bank representatives for the first time in 
     months.
       ``For the past 13 months we have been working for a 
     resolution that brings real relief to the hardest-hit 
     homeowners, is transparent about who benefits, and will 
     ensure accountability,'' Ms. Harris said in a statement. ``We 
     are closer now than we've been before but we're not there 
     yet.''
       The settlement has been hamstrung by one delay after 
     another over the last year. Winning California's support now 
     would represent a major win for the White House in this 
     election year.
       ``I am encouraged by the conversations we've had with many 
     states in the last few days,'' said Shaun Donovan, the 
     secretary of housing and urban development. ``This will be 
     one of the most significant steps in the recovery of 
     homeowners, neighborhoods and the broader housing market from 
     the worst collapse since the Depression.''
       ``My fundamental point is that it's a first step,'' he 
     added, citing measures like Mr. Obama's proposal last week to 
     lower interest rates for homeowners who are still current on 
     their mortgages.
       Officials involved in the negotiations cautioned that 
     broader state support could still be days away. And although 
     the timing of any announcement is subject to last-minute 
     maneuvering, as it stands now the deal would set aside up to 
     $17 billion specifically to pay for principal reductions and 
     other relief for up to one minion borrowers who are behind on 
     their payments but owe more than their houses are currently 
     worth. The deal would also provide checks for about $2,000 to 
     roughly 750,000 who lost homes to foreclosure.
       Those figures are contingent upon the number who respond to 
     the offer, which is likely to go to people who lost their 
     homes between Jan. 1, 2008, and Dec. 31, 2011. In addition, 
     said Patrick Madigan, the Iowa assistant attorney general, 
     homeowners who participate in the settlement will still have 
     the right to sue the banks for improper behavior in the 
     foreclosure process.
       California has been focused on measures that would benefit 
     individual homeowners, while New York has been most 
     interested in preserving its ability to investigate the root 
     causes of the financial collapse.
       Another critical issue for California is narrowing the 
     amnesty given to banks because under the state's False Claims 
     Act, state officials and huge pension funds like Calpers 
     would be able to collect sizable monetary damages from the 
     banks if they could prove mortgages were improperly packaged 
     into securities that later soured. What is more, California's 
     participation would result in having more money available for 
     many other states, including an estimated $500 million in 
     additional money for Florida.
       But the agreement's terms do not guarantee minimum 
     allocations of mortgage relief by state.
       Mr. Donovan added that there had been numerous discussions 
     with individual states that had specific concerns.
       California officials and other veterans of the foreclosure 
     crisis are haunted by the failure of past attempts to alter 
     the behavior of the big banks, including a 2008 deal with 
     Countrywide Financial, the subprime giant now owned by Bank 
     of America, and a more recent agreement last April between 
     federal regulators and the biggest mortgage servicers.
       The backers of the latest deal insist their plan has more 
     teeth, with a powerful outside monitor to oversee enforcement 
     and heavy monetary penalties if banks fail to live up to 
     commitments. While the past agreement with Countrywide gave 
     banks credit even if their offers to modify the interest rate 
     of the mortgage or write down principal were not accepted by 
     borrowers, this deal counts only what banks actually do for 
     homeowners.
       If banks fall short of the multibillion-dollar benchmarks 
     set out for principal reduction and other benefits for 
     homeowners, they will have to pay the difference plus a 
     penalty of up to 40 percent directly to the federal 
     government, according to Mr. Madigan.
       The depressed housing market continues to pose a drag on 
     the halting economic recovery. RealtyTrac, which analyzes 
     housing data, predicts two million more foreclosures over the 
     next two years. Some 11 million families owe more on their 
     houses than they are worth.
       The settlement, if all states participate, will also 
     include $3 billion to lower the rates of mortgage holders who 
     are current. Banks will get more credit for reducing 
     principal owed and helping families keep their homes, and 
     less for short sales or taking losses on loans that were 
     likely to go bad, like those that were severely delinquent.

                          ____________________