The RM-BSWG includes representatives from the Justice Department, the SEC, the FBI and the Department of Housing and Urban Development, among others. Its mission is to investigate the securitization and marketing of residential mortgages that contributed to the financial crisis. Presumably, this Group is necessary because the much-ballyhooed $26 billion settlement of the lawsuit brought by 49 state attorneys general and the federal government against the five major banks deals only with mortgage and foreclosure process abuses, such as robo-signing.
Under The Settlement, which was finally approved by a federal judge earlier this month, the banks will reduce the principal on loans held by some now-lucky underwater homeowners, refinance certain mortgages at current and very low rates of interest and compensate the winners of the robo-signing lottery, who lost their homes due to improper foreclosure practices, to the tune of approximately $2,000 apiece. That certainly will pay for a 400 square-foot apartment for a family of four for a couple of months. But most importantly, the settlement does not "Release any criminal liability or grant any criminal immunity," nor does it "Release any private claims by individuals or any class action claims."
Bottom line, the Daily News Op-Ed appropriately points out that 12 million homeowners, collectively $700 billion underwater, are in or near foreclosure. Reality check—a $26 billion settlement (only $5 billion of which is in cash) is a relatively insignificant figure given the scope of this disaster. The very existence of the RM-BSWG and the fact that the banks haven't been released from any criminal liability is an acknowledgement of that.
Let's, for the moment, take the Daily News Op-Ed with a grain of salt, and give the RM-BSWG the benefit of the doubt. For the sake of argument, let's assume that they are working hard behind the scenes—actually, let's pray for that. The politicians who set the group up know full well that perception is reality, and after five years of pain, the fact that the new RM-BSWG has yet to find an office, and that there seems to be no institutional awareness of their mission within government, looks very, very bad. And if this working group really is all hat and no cattle, designed to ameliorate the public for a moment in time which has now passed, let's stop playing games. Close up shop and leave the real work to the class action lawyers. You better believe that they are sufficiently motivated.
I, for one, hope the RM-BSWG is the real deal. With that in mind, I make the following plea: this is a mission that must be accomplished NOW so please get your act together, guys. In the face of such stark reality, the mere appearance of reality is both immoral and unacceptable.
Adam Levin is chairman and cofounder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.