Beau Biden: Delaware AG on his Fight to Investigate the BanksOctober 18, 2011
Millions of Americans, as we all know, are struggling to keep their homes. Details are emerging today about the latest band-aid proposal that would claim to help troubled homeowners. Bear in mind, it has no debt restructuring and no bank restructuring.
It simply comes as state and federal officials are now pushing a plan to allow some (and the key word there is some) homeowners to be able to refinance their mortgages as part of a larger settlement with big banks over fraud closure. The problem? You only qualify if your mortgage is underwater and you’re up to date on your payments. No mention of the fact that your mortgage has to be owned outright by the banks. (Only one in five of them actually are, which leaves out 80% of the markets.)
Beau Biden, Attorney General for the State of Delaware, has made it his mission along to hold the banks accountable for their behavior in such a way that we can discipline and encourage our way into a system that actually resurrects a positive future for the people in this country. Here’s his interview.
The rush transcript from MSNBC.com is below.
RUSH TRANSCRIPT FROM MSNBC.COM:
>>> all right. back now with no way to live. millions of americans, as we all know, are struggling to keep their homes. details emerging today about the latest band-aid proposal that would claim to help troubled homeowners. bear in mind, it has no debt restructuring and no bank restructuring. it simply comes as state and federal officials are now pushing a plan to allow some, and the key word there is some, perpetuating the us and them reality here, some homeowners will be able to refinance their mortgages as part of a larger settlement with big banks over fraud closure. you only qualify if your mortgage is underwater and you're up to date on your payments. no mention of the fact that your mortgage has to be owned outright by the banks, which, by the way, only one in five of them actually are, which leave s out 80% of the markets. i don't mean to laugh, but we've been sitting with some of these silly solutions for now. our next guest is not content with any of the silly solutions. i'll tell you that right now. he's not here to play small ball and he has made it his mission along with a few other gentleman and ladies in this country to hold the banks accountable for their behavior in such a way that we can discipline, and shall we say, encourage our way into a system that actually resurrects a positive future for the people in this country as opposed to what we're dealing with now. joining us exclusively to break it down, a man recently hailed as a political game changer by "the huffington post," appropriately so, delaware attorney general, beau biden. it's a pleasure to have you.
>> a pleasure to be on, dylan. thanks for your coverage of this.
>> what frustrates you the most about the nature of the -- the framing of the conversation, so far?
>> it's the framework of the investigation. look, we have a lot of colleagues that are doing a lot of good work, but eric schneider and i take this position. if someone came to me and said, look, you've got me for home improvement, and you know i sold bad gutters or faulty gutters to a little old lady, you got me on that, but i built the foundation and built the roof. and before i settle with you on the gutters that were a fraud, i want you to guarantee to me you'll not look at the foundation i built and not look at the roof. that's the essence of what the folks have asked eric schneiderman and i to do, and others. and the reason you see eric and i not as active as participants in the current multi-state investigation is that we're simply unwilling to give up our right, in fact, our duty, to investigate this entire spectrum of issues. look, servicing didn't cause the meltdown. servicing is what this investigation is about. but attorney general snyder schneiderman and i are focused on origination claims, securitization claims, and a little old thing calledm mers. my view of the world, these banks have almost, my hypothesis is, they've lost track of who owns what in america. they literally have lost track of who owns what. the borrower is so disconnected from the person who owns the mortgage, the investor, it's been sliced and diced 15 times. so that disconnect is having serious consequences for the borrower. and at least the foreclosure crisis, in my state, for instance, in my state, we'll have over 6,000 foreclosures this year, in little old delaware. we're one of the leading states in the eastern seaboard for foreclosures. the banks are incentivized. 25 years ago, you knew your banker, you could go refinance or work it out or do some kind of loss mitigation. you might not get it, but you have a discussion. borrowers in my state can't even get their lender on the phone. and when they do, when they do and if they do, they're being told, look, do it for -- pay $900 for -- versus $1,000 for 90 days. if you do that, we'll modify your mortgage. 91st day comes along, 95th day, 100th day, the bank comes along and says, we're foreclosing. they say, wait, we have a deal. they say, what deal are you talking about? they haven't talked in-house in the bank. that's what people are doing in my state. eric schneiderman and martha coakley, attorneys general all across the country are doing workshops about counseling on how people sort through this. look, not everybody deserves a modified mortgage, but some people do. and those that do at least should have a meaningful discussion. people can't even have a meaningful discussion with their lender. that's the most frustrating thing to me. and that's why i'm not leaving any investigation off the table.
>> there's an exacerbating factor that lays on top of everything that you just said. which is that the actual financing that gets put into the marketplace for home loans, a huge percentage of that financing comes from the u.s. government, by virtue of fannie mae and freddie mac. now, in defense of the taxpayer, there are certain representations and warranties and standards, effectively, that fannie mae and freddie mac require if they are going to purchase a pool of loans. there have been consistent, i guess they call them, dipstick tests, where you can kind of look inside of one of these blended securities to see whether, in fact, they are compliant with the government's standard to be sold to the government, so you can get government money, so you can keep making loans, and a remarkably large number of those warranties and representations anecdotally, in the dipstick tests, show a tremendous amount of loans that do not comply with government standards. and yet the government has been and continues to buy these securities. do you -- why is that?
>> i can't answer that. i can't speak for fannie and freddie. i have a lot of questions of fannie and freddie. as you know, they own the bulk of -- they are the investors. well, they're wholly owned by the taxpayer of this country. we own fannie and freddie.
>> we own our own bad mortgages?
>> we own our own bad mortgages, so we can do something about that. that's why from our perspective, we've had the wrong parties a t the table. just to deal on this investigation purely with the servicing issue is to so narrowly limit it, it doesn't allow us to do all the whole investigation, that require us to have all of the parties at table. fannie and freddie, with the biggest investment portfolio, other investors, private and third party investors, originators, some of whom aren't even left anymore, or left standing, as well as the attorneys general and the federal government. i have a bunch of questions for fannie and freddie. the reality is we need to look really deep into, and we are looking deep into, whether representations and warranties were breached when these mortgage-backed securities were securitized. there's an open question, that's what we're investigating, whether or not when they securitize these mortgages, whether they were actually assigned to them when they were bundled into a trust and sold as a security. that's an open question, and as you know, that's a big question, and it has serious consequences. now, because what it raises the question of, what happens when those representations and warranties are breached? and do you have the ability to push it back.
>> or are we in a too big to fail scenario when the u.s. government is funding this casino. it's a pleasure to speak with you and have the encouragement of knowing that you and attorney general schneiderman and the others that you mentioned are very much aware of these issues and are working aggressively at this point to try to take them on. so we are all, i think, encouraged and look forward to learning whatever it is that you're able to discover in this investigation.
>> thank you for doing what you're doing and covering this. it's not worth being in public life unless you're doing your job and investigating things and that's what i'm paid to do and that's what i'm doing.