The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2010, established the Consumer Financial Protection Bureau (CFPB), a new regulator with the authority to challenge discriminatory lending practices. Last Thursday, however, the House passed the Consumer Financial Protection Safety and Soundness Improvement Act, or HR 1315, giving the Financial Stability Oversight Council—made up of federal banking and financial regulators—the power to veto CFPB regulations with a simple majority vote.
In the meantime, as Reuters recently reported, all fifty states’ attorney generals have been negotiating a settlement with big banks in response to complaints that they were using faulty documents in seizing homes. All the while, these institutions continue to file such documents, which may very well violate centuries of property law.
Settlement terms would include the banks paying up to $25 billion in penalties and "committing" to following the new rules set out by the CFPB. In return, the banks would get immunity from new civil lawsuits, as well as similar guarantees by the Justice Department and the Department of Housing and Urban Development, both of which have participated in the negotiations.
This news of limited oversight and likely impunity from adequate justice for homeowners came just as the Government Accountability Office (GAO) released the results of its first-ever audit—mandated by the same Dodd-Frank Act that established the CFPB—of the U.S. Federal Reserve. According to GAO’s analysis, the central bank gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, while the gross domestic product of the entire U.S. economy last year was only $14.5 trillion. The audit also found that the Fed outsourced most of its lending operations to these same institutions, delegating contracts largely on a no-bid basis.
What message is the U.S. government sending to its people when the banks that sparked the ongoing economic crisis get to “settle away” accountability for the lending practices that have driven countless Americans out of their homes while receiving more money (than an entire year of U.S. economic activity) with less oversight? This is a stark reminder that it is high time to hold the administration accountable to the interests of the people and consider bold alternatives to debt financing for the fulfillment of the human right to housing.