WASHINGTON Jan 31 U.S. lawmakers on Thursday
asked bank regulators to turn over documents related to the $8.5
billion settlement that ended a government-mandated review of
crisis-era foreclosures, saying transparency was needed to boost
confidence in the settlement.
Senator Elizabeth Warren and Representative Elijah Cummings,
both Democrats, said the Federal Reserve and the Office of the
Comptroller of the Currency (OCC) must address concerns that
financial institutions have not been held accountable for
misdeeds during the 2007-2009 U.S. financial crisis.
In a separate letter also released on Thursday,
Representative Maxine Waters, also a Democrat, said questions
remain about why the independent reviews were stopped and how
borrowers will be evaluated for potential compensation.
The case-by-case reviews of foreclosures came in response to
the "robo-signing" scandal of 2010, in which banks were said to
have used defective or fraudulent documents to pursue home
But after the review process got expensive without resulting
in relief to consumers, regulators opted for a different
They said settlements with mortgage servicers, which were
announced earlier this month would replace the reviews with a
broader framework that allows borrowers to receive compensation
regardless of whether they faced actual harm.
"We believe that public confidence in the settlement - the
confidence necessary to speed recovery of the housing markets -
will exist only if the OCC and the Federal Reserve provide
additional transparency into the process used and information
gathered during the Independent Foreclosure Review process,"
Warren and Cummings said in their letter.
Cummings was critical of the settlement when regulators
announced it earlier this month and said the OCC and the Fed had
not sufficiently answered questions, such as who would get the
The financial industry has been closely watching Warren
since she won election to the U.S. Senate in November.
She gained a reputation as an opponent of Wall Street excess
by overseeing the financial system bailout and later setting up
the Consumer Financial Protection Bureau, and she would lend a
high profile to whatever issue she chooses for her first big
push as a lawmaker.
The pair called on regulators to turn over documents on the
independent contractors who reviewed borrower files, the total
number of reviews undertaken by each contractor and the number
of files in which unsafe practices were found.
Waters, who is the top Democrat on the House of
Representatives Financial Services Committee, criticized the
sudden end of the reviews and asked the regulators to establish
an independent monitor to oversee the settlement process.
Both letters were addressed to Fed Chairman Ben Bernanke and
Comptroller of the Currency Thomas Curry.
The initial settlement called for Bank of America Corp
, Citigroup Inc, JPMorgan Case & Co, Wells
Fargo & Co, MetLife Bank, and five others to pay
$3.3 billion directly to eligible borrowers, and $5.2 billion in
loan modifications and forgiveness.
Separately, HSBC, Goldman Sachs and Morgan
Stanley also reached similar settlements, bringing the
total payout to $9.3 billion.