A quick correction to yesterday’s post: the HUD audit that found evidence of fraud was concluded two months ago, not that it was completed in two months. I read the following paragraph from Shahien’s story too quickly:
The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government. The audits were completed between February and March, the sources said. The internal watchdog office at HUD referred its findings to the Department of Justice, which must now decide whether to file charges.
Given that this has been with the Department of Justice since as early as March why hasn’t there been movement? Who knows what, and why doesn’t the public know more? Is this a one-off event, or are there signs of more systemic problems with the servicing industry and foreclosure process? Given that taxpayer money is being ripped off and that many economists believe housing, deleveraging and foreclosures are closely tied to the fate of any economic recovery, why aren’t we seeing this as public priority number one?
Kudos to the HUD Inspector General Office for taking the initiative here when banking regulators and the administration are showing less results. Let’s take a second to review the mission of the Office of Inspector General of HUD:
We are committed to our statutory mission of detecting and preventing fraud, waste, and abuse and promoting the effectiveness and efficiency of government operations. While organizationally we are located within the Department, we operate independently with separate budgetary authority.
Matt Stoller pointed out on twitter the listed biography of the acting Inspector General is less meritocrat on a revolving door with Wall Street and much more long-term civil servant with a concentration in law enforcement and has been there since 2002:
OIG Senior Staff Bios
Michael P. Stephens
Acting Inspector General
Michael P. Stephens has been the Deputy Inspector General since January 2002. He has over 35 years of government service which includes 20 years as a Special Agent for the United States Secret Service. He was assigned to the Presidential Protection Division at the White House and held various supervisory positions within the agency. He has served as a Vice President for Corporate Security for a defense contractor, a senior criminal investigator for the OIG for the Resolution Trust Corporation during the Savings and Loan crisis, Chief of Security for the Bureau of Engraving and Printing, Department of the Treasury, and Deputy Assistant Inspector General for Investigations for the Department of Veterans Affairs. He has extensive experience in security, criminal and administrative investigations.
Mr. Stephens has received numerous awards during his career including the Secretary of Treasury Award and the Presidential Rank Award (Meritorious Executive).
Mr. Stephens is from St. Louis, Missouri. He is married to Linda Stephens and has three daughters. He attended Chaminade College Preparatory in St. Louis and Olivet College, Olivet, Michigan.
He is a member of the International Association of Chiefs of Police and the Association of Former Agents of the United States Secret Service.
This guy is distinctly not an embryonic investment banker gestating within the ranks of a Democratic administration. He’s not a slumming meritocrat who thinks of public service as jumping from government to finance, and finance to government, and government to finance again; but already it was impossible to say which was which. He’s a civil servant who apparently takes the mission statement of his office seriously. And he’s a long-time secret service agent and law enforcement specialist who didn’t read the memo where we aren’t enforcing laws on Wall Street.
In this dark, cynical period, I’m actually shocked how refreshing I find this. Here’s a simple request: when it comes to making sure the financial sector isn’t running out of control over trust and mortgage law and making a mockery of the foreclosure process (and destroying the economy in the process), can we get less Ivy League supermeritocrats and more people associated with the “International Association of Chiefs of Police” and the “Bureau of Engraving and Printing”?
In unrelated news, police maced protestors outside a JP Morgan shareholder meeting yesterday.