Bank of America Bombshell: Whistleblowers Reveal Orchestrated Coverup and Massive Borrower Harm
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Why does Promontory prosper despite such implausible, indeed, embarrassing performances? It’s because financial firms are eager buyers of extreme management-flattering positions that are seldom subjected to scrutiny thanks to Promontory’s roster of former regulators. Indeed, Promontory occupies a position no firm holds in any other heavily regulated space, that of being the dominant shadow regulator. As we will demonstrate in later posts, the claims made by Promotory about the review process as to its independence and completeness are at odds with considerable evidence on the ground.
We will present the evidence supporting each of the findings in successive posts in this series.
* While the OCC maintains that some borrowers may still receive the maximum payment under the foreclosure reviews, $125,000, the abrupt termination of the foreclosure reviews at Bank of America and other banks and the dismissal of trained staff indicate that not further investigation will be made. That, in combination with the efforts we will describe to show how evidence of harm was not considered, minimized, or suppressed, suggest that the only people who might receive that level of payout will be ones that suffered not just egregious but easily identified harm and were also fortunate enough to get through the review process before the settlement was finalized.
** We attribute very little value to the “ required other amount of assistance” of $1.6 billion, which Bank of America can satisfy by extremely low cost actions, such as writing off deficiency judgments on foreclosed borrowers. A deficiency judgment occurs when, after a foreclosure, the borrower is still liable for the difference between the amount owed on the mortgage when it exceeds the amount recovered in the foreclosure sale. People who undergo foreclosures are almost always under severe financial stress (we have discussed elsewhere that the incidence of “strategic defaults”, ex on second homes, is greatly exaggerated). Banks historically have not pursued deficiency judgments; the cost of going after the borrower greatly exceeds what they might collect. At best, Bank of America might be able to sell them to debt collectors for a few cents on the dollar.