Republicans frequently criticize President Obama as an adversary of capitalism: they say he wants to “put free enterprise on trial” (Mitt Romney) or that the president believes the country’s problems “must be the fault of those people on Wall Street” (Mitch McConnell).
But oddly, when Obama announced in January the formation of the Residential Mortgage-Backed Securities working group, Republicans were completely silent. The working group’s stated purpose is to investigate and potentially prosecute major Wall Street firms, but no Republican presidential candidate or member of Congress publicly criticized the effort.
Behind the scenes, however, Republicans are keeping a close eye on the group—and letting the members know they are watching. The Nation has exclusively obtained a letter to the working group from Representative Patrick McHenry, a North Carolina Republican with major Wall Street donors. The letter openly questions the purpose of the working group, and asks some intrusive questions about funding, staffing and expenses—and reminds the members that the House Committee on Government Oversight Reform, of which McHenry is a member, can investigate “any matter” it chooses.
The letter, which was sent to several members of the working group in early February, lays out seven questions and demands an answer within two weeks. The questions are:
1. Please explain in detail the mission and goals of the Residential Mortgage-Backed Securities Working Group.
2. Please provide a detailed accounting of the Residential Mortgage-Backed Working Group’s anticipated staffing, funding (both state and federal sources), and expenses.
3. Please distinguish in detail how the work of the Residential Mortgage-Backed Securities Working Group will differ from the existing work of the Financial Fraud Enforcement Task Force.
4. Insofar as the Financial Enforcement Task Force has achieved “limited success” and “has fail[ed] to produce any major prosecutions stemming from the housing crisis,” how will the Residential Mortgage-Backed Securities Working Group achieve different results?
5. The Office of SIGTARP recently announced a 72-month sentence for a defendant convicted of defrauding financial clients who sought mortgage modifications. If the Office of SIGTARP continues to pursue convictions stemming from illegal mortgage-related activities, please explain what enforcement gap the Residential Mortgage-Backed Securities Working Group will fill.
6. Please explain how the work of the Residential Mortgage-Backed Securities Working Group will be affected by any settlement agreement executed by state attorneys general and large financial institutions. Will such a settlement affect the Residential Mortgage-Backed Securities Working Group’s ability to pursue actions against the financial institutions who are parties to the settlement? If so, how?
7. To the extent that the work of the Residential Mortgage-Backed Securities Working Group is not duplicative or redundant and actually succeeds where other efforts have failed, will the settlement agreement with state attorneys general preserve all avenues of relief and compensation for any newly identified homeowner who was not in default yet foreclosed upon anyway?