by Michael Krieger, Liberty Blitzkrieg:
The biggest disappointment regarding Donald Trump since being elected President has been his total embrace of dangerous Wall Street thieves. As it is currently structured and incentivized, the financial services industry represents one of the most destructive and least beneficial forces within the U.S. economy. It is essentially a parasitic industry.
Unfortunately, Trump didn’t merely pick one or two competent finance guys to be in charge of finance-related jobs. Rather, he decided to surround himself with some of the worst of the worst (see links at the end) within an industry that often operates like a criminal syndicate. Treasury Secretary pick Steven Mnuchin is one of these people, and I believe this choice represents the single biggest mistake Trump has made as President-elect.
A very large percentage of the American public (including myself), remain irate at the complete lack of any justice served with regard to finance criminals in the aftermath of the economic collapse of 2008/09. When it comes to greedy, unethical behavior in the wake of that tragic period, Steve Mnuchin is in a class of his own. To appoint such a toxic financial oligarch to Treasury Secretary is a serious slap in the face to all American citizens.
Journalist David Dayen accurately described Mnuchin as the “Anti-Populist from Hell” in an excellent article published back in May of last year. Yesterday, he published what can be seen as a followup to that piece, in which he details the findings of a leaked memo from top California prosecutors who were looking to bring forward a case against OneWest for over a thousand legal violations they discovered. Inexplicably, the case never went forward, and the woman who had been in charge of the investigation, state attorney general Kamala Harris, has now been elected to the U.S. Senate.
The following is a tale of not just seemingly rampant illegal activity at the financial institution run by Steve Mnuchin, but of an attorney general’s office who couldn’t be bothered to do its job and protect the vulnerable residents of the state of California.
What follows are excerpts from the piece published at The Intercept, Treasury Nominee Steve Mnuchin’s Bank Accused of “Widespread Misconduct” in Leaked Memo:
Onewest Bank, which Donald Trump’s nominee for treasury secretary, Steven Mnuchin, ran from 2009 to 2015, repeatedly broke California’s foreclosure laws during that period, according to a previously undisclosed 2013 memo from top prosecutors in the state attorney general’s office.
The memo obtained by The Intercept alleges that OneWest rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.
In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.
But Harris’s office, without any explanation, declined to prosecute the case.
Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, warned: “Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities.”
The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.
According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.
The memo also raises questions about then-California Attorney General Kamala Harris, who was sworn in as a U.S. senator on Tuesday, and who will soon have to vote on Mnuchin’s appointment.
Why did her office close the case, deciding not to “conduct a full investigation of a national bank’s misconduct and provide a public accounting of what happened,” as her own investigators had urged?
Great questions. Also interesting how she was rewarded for flouting the law with a Senate seat.
State and federal law enforcement have been severely criticized for failing to hold accountable those responsible for the financial crisis and its aftermath. The OneWest case provides another example, and this time, the failure to prosecute could help the nation’s next treasury secretary get confirmed.
The relatively few additional files prosecutors were able to obtain revealed more evidence of backdating. The Consumer Law Section reviewed 913 documents from Quality Loan Service Corp., a trustee that worked with OneWest; 909 of them were backdated. The LPS files included backdated documents as well. Investigators determined this because the document metadata showing the dates of execution showed later dates than the ones stamped on the documents themselves.
Investigators surmised that OneWest listed trustees on notices of default before formally executing the SOTs, then backdated the SOTs to make it look like those trustees were already in place at the time the notice of default was issued.
Had OneWest put the correct date on the SOTs, they would have had to file new notices of default, restarting the 90-day clock and delaying the foreclosure.
“That’s consistent with a pattern of creating whatever documents that appear necessary at the time that they’re created to grease the wheels of the foreclosure machine,” said Mark Zanides, a former federal prosecutor who has represented homeowners in California.
CONSUMER LAW SECTION ATTORNEYS recommended “that the attorney general authorize us to file a civil enforcement action against OneWest.” Two months later, they were told that the office would not move forward with the complaint. OneWest representatives were not even brought in for a meeting to discuss the matter.
So why didn’t Kamala Harris leap at the chance to take on a bank that her staff said was illegally rushing Californians out of their homes? Why did she reject a case that her office had already spent significant resources on during a year of line-level investigation?
Kristin Ford, communications director at the attorney general’s office, did not respond to a detailed request for comment. Without an official explanation, we can only speculate why Harris passed up the opportunity. Perhaps she judged the case too difficult, or not a high enough priority, or not having enough of a human interest. Or maybe it was something else.
Harris has been criticized for a lack of vigor in prosecuting foreclosure fraud before. She set up a Mortgage Fraud Strike Force in 2011, dedicated to “protect innocent homeowners and bring justice to those who defraud them.” But despite hundreds of complaints of loan modification fraud — a primary target identified by the office — it only prosecuted 10 cases in the first three years.
The Intercept asked Harris’s office for a breakdown of cases initiated and prosecuted by the Consumer Law Section during her tenure. They have not yet provided them.
One of the supervisors involved in the OneWest case, Supervising Deputy Attorney General Benjamin Diehl, left the office in November 2013 to join Stroock Stroock & Lavan, a corporate law firm that represents Bank of America, JPMorgan Chase, and Citigroup in cases against consumers, regulatory agencies and state attorneys general. Emails indicate that Diehl arranged private meetings with Stroock partners six months before his hiring, while he still worked for the attorney general. Stroock would not make Diehl available for comment.
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