Sen Elizabeth Warren is already doing the work we elected her to do, the work that had Wall Street so scared of her being in the Senate. She's joined up with Rep. Elijah Cummings to investigate the Independent Foreclosure Reviews. These were set up by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve two years ago to do case-by-case reviews of foreclosures that were caught up in the fraudulent robo-signing scandal.

But that's not really how it's worked out. David Dayen explains.



But the independent reviews turned out to be neither independent nor reviews. As whistleblowers have pointed out, the banks handpicked and paid the salaries of the reviewers, third-party consultants who have increasingly become a substitute for government bank examiners. The data from the borrower files, as well as the guidelines for review, all came from the banks, and in many cases the banks made the determinations of harm themselves, leaving the reviewers to merely check their work. Managers overseeing the consultants overlooked entire categories of borrower harm, even obvious ones like servicers rejecting loan-modification payments from a borrower with a signed agreement, or tallying up impermissible fees. The managers also steered the ground-level reviewers, most of whom were temporary employees with little or no expertise in mortgages or foreclosures, away from reporting significant mistakes. Banks could even appeal whatever errors did get through (borrowers, of course, could not). Meanwhile, the complex rules for scrutinizing the documents extended the time it took to examine each loan file, which was good news for the consultants who raked in well over $1 billion at last count.

“Public confidence in the banking system has been badly undermined by a widespread concern that large financial institutions are not held fully to account when they break the rules—and that consumers are not sufficiently compensated,” Warren and Cummings wrote in their letter to the OCC and the Fed last week. “It is critical that the OCC and the Federal Reserve disclose additional information about the scope of the harms found to establish confidence in the sufficiency and integrity of the settlement.”

Because of these issues, Dayen explains, the new head of the OCC stopped the reviews and determined it would provide compensation to the 3.8 million foreclosure victims from 2009 and 2010, to the underwhelming tune of less than $1,000 per foreclosure. That's not enough for Warren and Cummings. They've asked the agencies for "all performance reviews the two agencies conducted during the program before nixing it; the amount of money the banks paid their third-party reviewers; and the total number of reviews, along with the percentages of those in which errors were found." In other words, how about some transparency?As Dayen says, this finally could be the beginning of the investigation into the industry over foreclosure fraud. It's not that Cummings hasn't been trying, but being in the minority party in the House has limited his reach. Elizabeth Warren on the majority side of the Banking Committee means that therebe congressional oversight of the industry, and that maybe, just maybe, middle class Americans will have a fighting chance against Wall Street. At the very least, we've now got an ally with power.