Remediation consultants become targets of investigation
One major goal of last month's sweeping settlement of flawed mortgage and foreclosure charges by big banks was to correct the untenable situation of independent reviews by third-party companies of individual mortgages.
The process was taking too long and costing banks outrageously, about $2 billion. Those reviews were mandated by another settlement struck the previous April.
DealBook reports that, "Critics concede that regulators have little choice but to hire outsiders for certain responsibilities after they find problems at the banks. The government does not have the resources to ensure that banks follow the rules. Still, consultants like Deloitte & Touche and the Promontory Financial Group can add to regulators' headaches, the government documents and interviews indicate. Some banks that work with consultants continue to run afoul of the law. At other times, consultants underestimate the extent of the misdeeds or facilitate them, preventing regulators from holding institutions accountable."
But it will be hard to break the grip of the remediation industry. The government can't ensure compliance and processes with companies that settle charges simply because the resources aren't there. So at some point, third party review companies become necessary.
Of course, they have every incentive to milk to the situation for as much money as possible. We may see some charges brought against some of these consulting firms, as the issue turns into a political hot potato.
- here's the article