It seems our banking regulators and agencies are becoming even more creative in order to get around having to impose the normal penalties against large banks for fraudulent behavior.
A recent case in point is HUD‘s proposing to modify their individual loan certification form which is currently required by banks to obtain FHA insurance. With this modification, Chase and Citigroup wouldn’t have to acknowledge the recent fraud associated with foreign exchange manipulation, which makes them ineligible for FHA insurance.
Several lawmakers are working to raise awareness of this issue. Senator Sherrod Brown (D-OH), Senator Elizabeth Warren (D-MA), and Congresswoman Maxine Waters (D-CA) have noted in a letter to HUD and FHA heads that “Under the current loan certification requirements … big banks, including two major FHA lenders, JP Morgan Chase and Citigroup – would be barred from obtaining FHA insurance once their criminal plea agreements take effect.” The lawmakers also noted that with the proposed change “those banks remain eligible for FHA insurance.”
This so-called “modification” lets the banks off scot-free! They can continue to play the FHA insurance game. They committed the fraud, and if the modification goes through, there are no repercussions.
[tweetthis url=”http://bit.ly/1CXyvxC”]This so-called “modification” lets the banks get off scot-free! ~ @RichardMBowen #HUD #SEC #FHA #DOJ[/tweetthis]
This follows on the heels of the SEC issuing waivers from disqualification to the two banks (among others). So, the SEC also made changes to eliminate their automatic penalties for bank misbehavior.
While the Department of Justice and our present administration are claiming to hold banks more accountable, they are, in fact, attempting to eliminate the very consequences they imposed. Citi itself was sued in 2012 for civil fraud involved with obtaining FHA insurance, admitted to it, and paid the $158 million fine. Among other admissions, “CitiMortgage admits, acknowledges and accepts responsibility for … CitiMortgage submitted to HUD-FHA certifications stating that certain loans were eligible for FHA mortgage insurance when, in fact, they were not.”
And Chase has also admitted in 2014 to fraud related to FHA insurance and paid a $614 million fine.
It is absolutely mind boggling that this admitted fraud, which was committed against the FHA, apparently does not make them ineligible for FHA!! But, the admitted fraud related to foreign exchange manipulation makes them ineligible!!?? HUH?
HUD states “that a certification on a separate lender-level form is sufficient for keeping criminally negligent lenders out of the program.” Really?
HUD is waffling! They’re parsing words! They have the audacity to claim that removing the loan-level certification clause does not represent any changes in their actual policy!
This is just plain insanity!
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
