Investigating the Mortgage Crisis

Investigating the Mortgage Crisis

In a press release last week, Chairman Edolphus Towns of the House Committee for Oversight and Government Reform announced a major investigation "into whether mortgage companies employed deceptive and predatory lending practices, or improper tactics to thwart regulation, and the impact of those activities on the current crisis."

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In a press release last week, Chairman Edolphus Towns of the House Committee for Oversight and Government Reform announced a major investigation "into whether mortgage companies employed deceptive and predatory lending practices, or improper tactics to thwart regulation, and the impact of those activities on the current crisis."

This investigation is much needed, and frankly, overdue, as the foreclosure crisis has now hit record levels.

The Committee has requested–and will subpoena if necessary–records from Wells Fargo, Bank of America (including Countrywide), JP Morgan Chase, Citigroup, Residential Capital (GMAC), and US Bank Home Mortgage.  It is also issuing a subpoena for records on Countrywide Financial’s VIP program.

While the media seems focused on the Countrywide VIP program and questions of whether Towns himself benefited from it (he has denied doing so but will forward the documents to the House Committee on Standards of Official Conduct), I think the far more significant development here is the breadth of information the Committee is demanding from Big Banking.

The records in question cover 2000 to 2008, and include: the number and types of mortgages issued (whether fixed rate, adjustable, subprime, etc.); number of foreclosures and on which types of mortgages for every month during that time period; any marketing strategies and target audiences for residential mortgages, home equity loans, or similar products; special benefits provided to officials with a regulatory relationship with the banks; any draft legislation pertaining to mortgage lending that was offered to legislators; and any coordinated campaigns with other banks to fight mortgage regulation.

The Nation‘s national affairs correspondent William Greider recently wrote of the financial crisis: "We may know the broad outlines, but the landscape remains littered with unanswered questions and informed suspicions about who did what to produce the breakdown. The relevant facts are still buried in the files of Wall Street firms and the regulatory agencies that utterly failed as watchdogs…. Asking deeper questions about the true sources of the calamity is a first step toward developing authentic answers to the nation’s predicament."

Here’s hoping the Towns’ investigation helps bring responses, finally, towards some of those crucial authentic answers. 

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Katrina vanden Heuvel
Editor and Publisher, The Nation

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