Leaders of the state attorney general’s Consumer Law Section ... recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.
But Harris’s office, without any explanation, declined to prosecute the case.
As a member of the freshman class in the Senate, Kamala Harris will now be one of those voting on Mnuchin’s appointment.
California uses a foreclosure process that’s not overseen by a judge. It counts on all sides in the matter to follow a strict set of rules. But Mnuchin and OneWest didn’t just bend those rules, they regularly broke them to force homeowners onto the street.
The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.
According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.
OneWest used false documents to drive mass foreclosures, “robo-signing” thousands of back-dated foreclosure notices. Some of these documents were created in bulk even before Mnuchin re-opened OneWest from the ashes of IndyMac.
OneWest also stepped into the bidding process, essentially promising to pay themselves the current loan amount, and shutting down any other bidders. Since the value of those loans was already factored in when Mnuchin picked up IndyMac, it was a system that allowed him to essentially buy not just a bank, but tens of thousands of homes, all for one low, low price.
OneWest consistently instituted practices that removed families from their homes. They didn’t just do it by following the rules with callous ruthlessness, as in the 27 cent case, they did it by outright cheating. They initiated foreclosure actions in bulk, often where they were unwarranted, forcing homeowners to notice the action was underway and take counteraction to stop a 90-day clock—a clock which OneWest sped up by backdating documents.
They reported inaccurate information, which in a system where things proceed without the normal intervention of a judge, meant some foreclosures were already too far along to halt before homeowners were even aware. They consistently interfered in the bidding process, ensuring that neither existing homeowners nor other families had a chance to acquire the property at auction.
It was a process that worked very well for Mnuchin.
“He was a primary actor in the foreclosure crisis, and where other people saw calamity, he saw the opportunity to make a quick buck,” Frisch said.
More than a quick buck. A quick $2 billion. He snapped up IndyMac for $1.5 billion, and sold OneWest and its nice fleet of foreclosed homes for $3.5 billion.
Why didn’t Kamala Harris use her office to prosecute Mnuchin? The answer seems to be partly that the state attorney general’s office was worried that the tangled state and federal banking regulations would leave them in a position where they couldn’t effectively access the information they needed. Despite evidence of widespread fraud, it wasn’t going to be an easy win.
The prosecutors made clear to their superiors that the case would be a tough one, with no guarantee of success. They said they expected litigation to chew up substantial resources and last three to five years (which would have been about now).
Every attorney general has limits on resources that force her to pick her battles. Harris likely saw this as a long, expensive fight with no guarantee of a win. So, like almost every bankster involved in robbing the nation of billions before, during, and after the financial crisis, Mnuchin walked away. Counting his cash as he left.
And now, Trump’s pick to head Treasury can brag about his escape.
Mnuchin spokesperson Tara Bradshaw, without commenting on the violations themselves, would only say by way of justification, “the attorney general’s office made no finding of any violation and took no action against OneWest.”
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