The producers of the PBS “expose” on the Financial Crisis are at their most hapless when they allow GOP Senator Chuck Grassley to pretend to be outraged by the lack of prosecutions after the financial crisis. Grassley has spent 30 years in the Senate, he was the Chairman of the Senate Finance Committee from 2003 until 2006 (during the peak of the mortgage abuses), and tried his best to prevent Elizabeth Warren’s Consumer Protection bill from even coming up for a vote. If anyone is complicit in the dysfunction in Wall Street, it’s Chuck Grassley. Grassley even filibustered the appointment of the director of the Consumer Financial Protection Bureau (CFPB) so that the President had to make a recess appointment of a director. And one of the first things that the CPFB did when it started up, over Grassley’s obstruction, was to issue rules that made it harder to issue deceptive mortgages and mortgages beyond the ability of purchasers to repay. When Grassley sputtered his outrage that nobody had been prosecuted for mortgage abuses, the PBS interviewer nodded along in shared outrage, without even a single question about why Grassley opposes clear laws forbidding dishonest mortgage policies.
Frontline also didn’t ask Grassley about the huge contributions he got from K-Street lobbying superstars The DCI Group when he was chair of the Finance Committee. Among DCI clients were FreddieMac who paid DCI to lobby successfully against tighter regulations. What about the $30K Grassley got from AIG during that period or similar amounts from Wells-Fargo or the Security Industries Association? Not a peep. Instead the Frontline producers gullibly nodded along as Grassley served up his authentic cornpone prairie populist act.
The Justice department says its failure to indict bankers is due to the difficulty of proving criminal action under existing law – the law prior to the passage of Dodd-Frank and the Consumer Protection Law. The Democrats in the Congress and the White House have worked hard since 2009 to tighten up the laws. Grassley and his GOP colleagues have fought them and weakened reforms they could not block. There is no way, however, that viewers could have learned that from Frontline’s story.
The CPFB mortgage rules that Senator Grassley tried so hard to sabotage:
were intended to address many of the mortgage lending practices that played a part in the housing “bubble” issues leading to the “mortgage crisis” and create a bright-line limited “safe harbor” standard for certain residential mortgage lending activities. They will require extensive lender documentation relating to a borrower’s ability to repay, which is intended to address some of the low-and-no-doc loans that abounded in the heyday of the “bubble.” QM standards will bar such practices as interest-only and negative-amortization mortgage loans, as well as loans with a maturity in excess of 30 years. [source]
The rules also target mortgage servicers – the people who collect fees.
Today’s move takes aim at abusive practices by loan servicers against people who’ve already gotten in trouble making their payments. Starting in January 2014, the CFPB will require services to fully inform borrowers in writing about foreclosure alternatives as a first response when payments are missed. An account will need to be at least 120 days delinquent before foreclosure proceedings can begin, and “dual tracking,” whereby banks simultaneously initiate foreclosure and engage in loan modification (often extracting modification fees and then foreclosing anyway), will be banned [Yglesias]
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