Having brought the economy of the United States, and a good part of the world, to the brink of a global depression, the American banking system has now unleashed a second scandal. This one involves an epidemic of cheating and lying in court filings by those handling home repossessions. It has been happening for many years. It has worked very well for the banks. And it would have continued to do so, had a few judges not decided that, in an economy so decisively affected by what happens in the housing market, it might be a good idea if bank representatives were actually telling the truth. What a novel idea.
Evidence increasingly shows that in tens of thousands of cases, the bank employees signing foreclosure documents had no training and possessed no knowledge of the underlying facts. They were just there to sign their names in order to give a veneer of procedural fairness to the process. In one case, an employee of GMAC has admitted under oath that he typically prepared 400 foreclosures a day and that, contrary to what was attested in his sworn statements, he did not know any of the details about the cases. Once again, as with the toxic investment vehicles they created, it appears that much of the ethically challenged banking sector wasn’t really interested in either the truth or in the more far-reaching consequences of their actions. They were interested only in cutting corners and making more money. Their victims this time are not investors and bank shareholders, although many are now beginning to feel unpleasant effects as financial stocks plunge with the deepening extent of the scandal. It is past and future homeowners who are the object of the bank’s miscreancy.
In most states, bank repossessions have stopped while companies like GMAC, Bank of America, JP Morgan Chase and others, along with government regulators and the predictable cast of lawyers, look at fixing the mess that has been created. At this point, any further drag on the housing market may well prompt lawmakers and the Fed to look at another stimulus — perhaps even a second TARP — which will obviously be paid for again with taxpayer money. The previous bailout was made necessary because of widespread banking improprieties. If there is another one, it will be in no small part because the banking industry in America still has a problem with truth and accuracy. It is never a good situation when these virtues are found in short supply, especially in banks. Their absence reflects an industry that still does not get it and prefers to place immediate benefits over ethical conduct and a demand for profits and bonuses ahead of decency and common sense.
It is an industry that continues to be well deserving of the outrage of Americans.