KEITH OLBERMANN: The Occupy movement has remained peaceful, despite violent overreactionfrom the police. This has allowed the Occupy message — "We are the 99 percent," — and the idea of standing up for those wronged by larger institutions to be heard and received by the country, whether it be government, corrupt banking practices or a combination of the two.
But all this may have come too late for thousands of our troops, in fact — like Scott Olsen, the Iraq vet — who had their homes illegally foreclosed on. A report from the Treasury Department office, which regulates the national banks, shows that 10 of the top U.S. lenders may have illegally foreclosed on up to 5,000 active duty servicemen.
The Servicemembers Civil Relief Act of 2003 affords special protection to active military members, including restricting ability of a bank to foreclose on the home of an active duty serviceman while that individual is overseas. The banks involved should come as no surprise to you. Bank of America, reviewing 2,400 foreclosures, Wells Fargo, looking at 900, Citigroup 700, Aurora — which was Lehman Brothers — is reviewing 56 foreclosures, and — if you're surprised that JPMorgan Chase and Morgan Stanley are not on that list — do not be surprised. They settled claims of illegal foreclosure on active-duty servicemembers earlier in the year.
For more on all this, let's bring in Pat Garofalo, economic policy editor at ThinkProgress. Pat, thanks for your time tonight.
PAT GAROFALO: Hey, thanks for having me.
OLBERMANN: How could so many banks be involved in this? Were they actively targeting active military members or is this just what the banks do with every foreclosure and the servicepeople got swept up in that?
GAROFALO: I think it's more the latter. There's not much evidence that they were actively targeting service members, but the banks were trying to cut corners on tens of thousands of foreclosures. They were robo-signing documents, they were submitting fraudulent documents to courts and — as it turns out — lots of service members seemed to have been caught up in all of that.
OLBERMANN: Is there — is there a requirement in the law that they — they look to make sure they're not doing this? Is it — do they have to be pro-active? Do the banks have to be pro-active in avoiding this or — is there some excuse like, "Well, yeah, we had — we were doing this by our — our robot systems and we didn't catch any of these"?
GAROFALO: Well, the problem is that their robot systems entirely are illegal. You're not supposed to be approving foreclosures and stamping them one by one by one without actually looking at them.
And so, the whole process from the beginning was tarnished and was potentially illegal. And now, what a lot of the banks are doing is — they're actually settling the claims that have to do with the service members. As you said, JPMorgan and Morgan Stanley settled those claims, but that actually hasn’t fixed the system. They went on and settled the claims with service members and then kept on submitting fraudulent documents and robo-signing and keeping the whole entire process in place.
OLBERMANN: So, where there have been not been settlements, what happens to those who — who were unlawfully foreclosed on in — as this investigation unfolds? Is it — is it too late for them — for their homes?
GAROFALO: There is still some hope. These cases are all kind of working their way through the court system right now. It was only a — you know, few months ago that this story broke at all, that we had any idea that the banks were doing this, even though they've been doing it for years. So, hopefully, some of these homeowners will get some sort of compensation from the banks through the court system, but — as of right now — we haven't seen much of that.
OLBERMANN: The office that I refer to, which is the Office of the Comptroller of the Currency, is merely reporting the numbers that it's — it’s culled from — from those that were given to it by the banks. Who's in charge of — of overseeing the whole process and who is in charge of — to the degree that this is prosecuted? And we presume that would be — just be a slap on the wrist if anything happens, but who's in charge of the — of the digging into this?
GAROFALO: Unfortunately, right now there is really nobody overseeing the enforcement process except for the banks. A lot of the settlements that have come forward that the regulators have negotiated have literally put the banks in charge of their own enforcement mechanisms. They said to the banks, "Hey, go back and look at your foreclosures and make sure you did them properly."
The agencies that would be in charge of prosecuting these sorts of things, agencies like the Securities and Exchange Commission — the SEC — don't have the resources to actively prosecute all of the cases that are coming up. You've actually seen the SEC settle a lot of these cases out of court for mere pennies with regard to how much damage the banks have done. And in large part, it's because the SEC just doesn’t have the time or the resources to actually prosecute all of these huge banks.
OLBERMANN: You hate to think of the — of laws being used as chilling effects on lawbreakers, but there is — is there any indication that just merely the reporting of this has gotten the banks to — to be a little bit more careful, as it regards active military service members?
GAROFALO: With regard to service members, yes, because the banks know that seeing "Bank Forecloses Illegally on Active-Duty Military," is a terrible headline, but when it comes to everybody else — there really hasn't been much action. Even after the stories first broke about robo-signing and everybody saw the extent of what the banks were doing, for months, they kept on doing it. They actually didn't shut the processes down at all.
OLBERMANN: Pat Garofalo of ThinkProgress, who did excellent writing on this today. Great thanks for some for your time tonight.
GAROFALO: Thank you.
