Tuesday, November 16, 2010

Obama's Veto and Mortgage Fraud

cross-posted at Dagblog

If you've been looking for a fight in the lame-duck session, we may be about to see one: this Wednesday, November 17th, the House is going to have a veto override vote on the so-called "Interstate Recognition of Notaries Act," H.R. 3808. (h/t John Cole) What is the Interstate Recognition of Notaries Act, you say?

A law that would basically make mortgage fraud by interstate banks legal. Let me rephrase that: a law that would make documents notarized out of state immune to challenge no matter how they were notarized, meaning the criminal shenanigans that mortgage servicers have gotten up to, such as swearing under oath to the accuracy of documents they've never seen, would become both legal and practically unassailable. [UPDATE: I was blogging in anger when I wrote this, and became a weaker blogger because of it. The bad documents would not become legally unassailable, but they would become harder to assail. The point of the law is to legalize the banks' slipshod electronic records service, MERS, and the general effect would be "solve" the problem of illegal record keeping by changing the law to the banks' benefit. And that is both immoral and foolish.]

If that's still too complicated, let me put it this way: this law would allow the banks to just make up documents and use them to take your house, even if they couldn't actually find the title to your house (because they'd sold your mortgage, say, or because you don't have a mortgage). And there won't be a damned thing you can do about it. The banks will no longer be accountable to the law. [UPDATE again: This was hyperbole on my part. There are other ways to challenge perjured affidavits, and notarizing perjury doesn't make it immune to challenge. But the general thrust of the law is to make that systematic perjury easier, and raise the bar to challenging it. That's a terrible, terrible idea.]

Now, President Obama vetoed this abomination in October. The shocking part is that it got to his desk at all. It got there on a voice vote in the House and unanimous consent in the Senate, meaning that they didn't actually count the votes.

This bill got through both Houses of Congress without the Democrats having any real idea how it would affect the financial crisis, or what its ramifications were. (To be fair, many of the horror stories about mortgage fraud and routine perjury by mortgage companies had not yet come to light when the bills passed.) Basically, it was the Administration that caught this one in time and killed the bill. That should give you an idea of how carefully our representatives generally think about the oversight of big finance, and of how thorough and terrible the influence of banking lobbyists on the Hill is.

The veto-override vote might only be symbolic; Obama tried to straddle some legal ambiguities on this one, and make his veto immune to challenge, by doing a kind of double veto strategy. He pocket-vetoed it, because pocket vetoes cannot be overridden, but also sent the usual veto memo to Congress, to protect against any claim that Congress was technically in session when he chose not to sign it (if the President doesn't sign a bill while Congress is in session, it automatically becomes law; Obama wanted to guard against that). And now that the Democrats have realized what the law would actually do, I don't think there's going to be a two-thirds majority in favor of it.

Tell your representative to vote against this monstrosity, even so. And keep count of who's willing to be counted as favoring it. If this vote ends up being only symbolic, let's remember what's being symbolized.

FINAL UPDATE: According to D-Day at FDL, this vote is actually an expression of procedural displeasure with Obama over the double-veto-failsafe trick. Sigh. I understand that. But it's hard to cheer for Congress after they originally passed this bill without paying any attention to what it said. Obama's procedural caution happened because he was forced to play backstop for a Congress that hadn't done its job.

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