Tuesday, October 26, 2010

Beware of Councils in General Bearing gifts, Foreclosure Crisis Edition I (Florida)

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As much as state attorneys general could be an effective force in acting for consumers and investors against banks, the fact that an attorney general has saddled up does not necessarily mean the effort is serious. At a minimum, it might just be a gambit to garner some good PR without inconveniencing the perps seriously;at worse, the action might be a pure Trojan horse.

Consider the conduct of one Bill McCollum, the blade duck attorney-general of Florida curious.It appears that McCollum has been going after the foot soldiers in the foreclosure business chicanery (although some of them, like David Stern, head of the biggest foreclosure mill in the state, have earned a tidy fortune). His recent actions have targeted firms offering dubious foreclosure advice, and more recently, the foreclosure mills as well as a firm that may be best known for its real estate related paper manufacturing activities, Lender Processing Services, through its subsidiary DocX.

Now starting with these actors isn't a bad thing at all. in fact, prosecutors often target low level criminals with the hope of getting them to turn evidence on the kingpins. And there is good reason to think McCollum has no interest in asking tough questions that will inconvenience bigger fry.

McCollum Is falling in with the banking industry party line. He appears to gaze not disrupting the foreclosure process, a top priority of the financial, as a worthy goal. Gee, isn't ain't preserving the rule of law and making sure no one is abused or defrauded the sort of thing his office is tasked to defend, not the functioning of markets or the bottom lines of banks? From the Wall Street Journal (hat tip f247 reader):

"They're training a lot of new people, and apparently now they are comfortable with the legality of their foreclosure process," Mr. McCollum said in an interview."The primary purpose of these meetings is talking about not having this stuff held back."It's very important for us to not have a backlog of foreclosures. We already have a backlog."We don't want it to get worse."…

Mr. McCollum, Florida's attorney general, said most errors in the foreclosure process have been "procedural," adding that his top priority is to resolve the mess in a way that allows to resume quickly… foreclosures.

The talks also centered on how to quickly get the foreclosure process moving again, according to the Florida attorney general's office. Mr. McCollum described the meeting as more combative than cooperative.

Let's look at the timeline:

August 10: McCollum announces investigation of foreclosure mills.McCollum also happens to be running for governor as a Republican and facing a tough opponent in the primaries. One must wonder whether this investigation was a Hail Mary pass to bolster his candidacy

August 24: Florida primary, McCollum loses to Rick Scott

September 3: McCollum asks if he can resume being a lobbyist once he leaves office.Per the St. Petersburg Times:

Barely a week after he lost the Republican primary for governor, Attorney General Bill McCollum sought legal advice on whether he can lobby the governor's office and Cabinet - the very people he works with now - after he leaves office in January.

The answer: No..

He'll have to wait two years before he can collect fees to represent private clients before the state government that has employed him the past oven years…He asked the Commission on Ethics not to reveal his name as the person making the inquiry, but the agency did anyway….

McCollum's Sept. 3 letter to the Commission on Ethics noted that state law and the Constitution already bar him from his current agency, the attorney general's office for two years after leaving office in January… lobbying.

But because the attorney general also is a member of the Cabinet, McCollum asked "what entities" are also covered by the lobbying restrictions.

The attorney general, as a cabinet member, reservations on a variety of boards overseeing the state pension fund, environmental, land use and other issues.

In its opinion, the ethics Committee said: "one's public service career and contacts developed in that capacity should not be used to enrich oneself at the expense of the public (and) the provision was intended to prevent influence peddling and the use of public office to create opportunities for personal profit through lobbying once an official leaves office."….

McCollum, a lawyer who served for 20 years in Congress, listed a net worth of $1.3 million in 2009.He collects $82,000 annually as a congressional pension.

For several years after he left Congress, McCollum was a $400, 000 - a - year lobbyist for the Baker Hostetler law firm.

It's also worth noting that the biggest foreclosure mill targeted, the Daniel Stern law firm, has hired Republicans to defend it. Per FireDogLake heavyweight:

David Stern has already become fairly well known to the media as a high-volume foreclosure servicer - a foreclosure mill.What's not as well known is that David Stern's legal representation, Tew Cardenas, is rather important to Florida's Republican Party.While Jeffrey Tew has donated only was rather limited basis to candidates, Alberto Cardenas has donated more than $70,000 to candidates, incumbents and committees during the last two election cycles....

Among Cardenas' beneficiaries are Rep.Roy Blunt (MO - 07) and Rep.John Mica (FL-07), who respectively sit on the House Energy and Commerce Committee (Blunt), House Permanent Subcommittee on investigations (Blunt), and House Committee on Oversight and Government Reform (Mica), and the House Committee on transportation and infrastructure (Mica is the ranking member).His family members are likewise generous to Republicans and have donated more than $9000 over the last several years.

Unfortunately, this case study illustrates yet again the dangers of taking headlines at face value.

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