Surprise! Congress Sides With Banks and Robo-Signers

October 26, 2010

By Terry Smiljanich:

The debate over who controls Congress – the voters or the financial industry – is finally over. Your congressman believes that what is good for Bank of America  and JP Morgan Chase is good for the country.

How can we be so sure? Just look at how Congress responded to the recent “robo-signer” foreclosure mess, in which banks have been filing false affidavits by the thousands throughout the country in support of their foreclosure actions. What was Congress’ response? Well, why not just pass legislation making it easier for the banks to continue this practice?

Here Come the Robo-Signers

Overwhelmed by the number of foreclosure actions banks must pursue in today’s real estate market (and caused by their reckless lending practices of a few years ago), the “robo-signer” mess stems from the practice of banks in purposely hiring unqualified personnel to pose as bank “Vice Presidents” to blindly sign affidavits in support of foreclosures with no knowledge of the true facts. Who cares if every now and then a few homeowners get kicked out of their homes by mistake? Ooops.

A quick reminder – an affidavit is a sworn statement under oath by the signer (affiant) that the facts asserted in the statement are true and have been personally verified by the signer. The signature is sworn to before a notary public, who verifies that the signature was made under oath. Filing an affidavit in court where you actually have no such personal knowledge, or putting a false notarization on the affidavit, is perjury, pure and simple. When your boss encourages the practice, he too is liable.

Congress to the Rescue: Who Was That Masked Man?

So, were our elected officials outraged by this practice, determined to crack down on criminal financial institutions and come to the aid of their constituents? Hardly. Back in April, 2010, the House passed the “Interstate Recognition of Notarizations Act,” which would make it easier for banks to file notarized statements using out-of-state notaries. In other words, in a local court in Utah a bank could file an affidavit in support of a foreclosure, signed by a “Vice President,” and allegedly notarized by someone in Maine. Imagine the poor homeowner trying to verify that this actually took place.

The “Bank False Affidavit Help Act” was introduced by Representative Robert Aderholt, an Alabama Republican. Guess who his largest campaign contributors are? If you guessed the financial, insurance and real estate industries, you are indeed very insightful. If you wonder how your own congressman voted, you’re out of luck. It was passed by an unrecorded voice vote.  Apparently, they wanted to make sure there was no evidence left at the scene of the crime.

Rare Act of  Bipartisanship to Help Campaign Contributors

So the new version of a bank bailout act gets to the Senate where it is assigned to the Judiciary Committee, headed by Democratic Senator Patrick Leahy of Vermont. On September 27, 2010, the day before the Senate recesses for the mid-term elections, Senator Leahy suddenly decides to take the bill away from any Committee debates and send it directly to the full Senate.

In a rare display of bipartisanship that warms the heart, the senior Republican on the Committee, Jeff Sessions of Alabama, agrees that this important piece of legislation should bypass normal Senate rules and go immediately to the full Senate for a vote.

In case you were wondering, the financial and real estate industries were the fourth largest contributors to Senator Leahy’s election campaigns, and the largest contributors to the campaigns of Senator Sessions.

For a bill to come to such a quick vote, however, you need the cooperation of the Senate leadership. Senator Bob Casey, D., PA, was in charge of pushing through any last minute votes before Senators recessed for their number one job, getting re-elected.

Sure enough, the “Bank False Affidavit Help Act” quickly gets on the agenda and is approved “by unanimous consent.” Apparently, everyone in the Senate thought this was just a peachy new law that needed immediate enactment. A sigh of relief could be heard from all the banks.

Uh-Oh

Luckily, a few journalists notice this little bit of legislative tom-foolery and wondered why Congress was coming to the help of the banks, yet again. Senator Leahy could only explain that he pushed the law through because of some calls from “constituents.” One wonders whether the “constituents” were small time homeowners worried about the plight of the banks and anxious that interstate recognition of notarizations be finally allowed.

Then, when major news outlets began publicizing the “robo-signers’ issue and banks were “shocked, truly shocked” to discover that their foreclosure procedures were less than optimal, the new law became suddenly homeless. President Obama decided to veto the Act (through pocket veto procedures, i.e., he simply failed to sign the Act within the mandatory period), and Senator Leahy suddenly decided that the President had done the right thing.  (Forget all that other stuff Leahy did earlier, at least he’d like you to.)

When Will Congress Speak For the People and Not the Special Interests?

Funny what a little sunshine can reveal about the workings of Congress.

Our political system is broken. Republicans and Democrats shout slogans at each other, but when it comes to the financial industry, common ground is miraculously found. Who controls Congress? By “unanimous consent” the answer is clear.