Congratulations To My Close Friend Lynn Szymoniak, Toughest Anti-Fraud Attorney In the US
As part of the foreclosure fraud settlement reached with the fifty state attorney general’s one name stands out, mainly because it’s a woman I’ve stood with for years working on these issues, my close and dear friend Lynn Szymoniak who will receive a well deserved $18 million as a lead whistle-blower.
I know the settlement has taken its lumps but now that it’s out there’s one point especially that needs to be highlighted.
First, a link to the settlement. Each of the Big Four banks has the same verbiage, but I’m focusing on Bank of America. The language is the same but they’ve been the worst, plus it gives me a chance to make fun of Brian Moynihan’s “hand-to-hand” combat comment. [Note to Brian: next time you decide to pick a fight in a rowdy bar think twice about how it might end up.]
Besides the long (long, long, long) list of exclusions this one stands out the most:
“For avoidance of doubt, this Release shall not preclude a claim by any private individual or entity for harm to that private individual or entity, except for a claim asserted by a private individual or entity under 31 U.S.C. § 3730(b) that is subject to this Release and not excluded by Paragraph 11.” Appendix F – Pg. 40.
So, what does that mean exactly? It means that except for whistle-blower claims already settled servicers remain fair game .. for everybody. Securities fraud claims? They’re still there. Criminal liability? Still on the table. Clouded titles? Who knows if they’ll win but anybody who wants to win the next $18 million has the right to try.
I know the settlement terms have been described as “broad,” and they look broad at first blush, but nobody pointed out that the exclusion list looks just as broad. This settlement is about government entities settling on very specific terms, terms so narrow when the exclusions are factored in that it’s not clear whether banks signed this as a release, or whether they signed it as a promise to basically move on and start behaving.
I still haven’t hard Moynihan retract the hand-to-hand combat phase and finally say “OK – that was ill advised and didn’t work out so well,” then admit that his bank has behaved recklessly, irresponsibly, and shamefully, then express a genuine desire to grow up followed through with action.
There’s some I know are hopeless. Infamous crook David J. Stern still has a license in good standing to practice law in FL thanks to the FL Bar; might be time for a ballot initiative to strip them of their disciplinary authority. Palm Beach County Judge Meenu Sasser, who pushed the disgraceful rocket-docket while proclaiming “I don’t see any widespread problem” documents (oh yeah, and while sitting on an enormous amount of bank stock) can now see how respectable judges react to the cesspool Stern and his ilk filled her courtroom with. FL Rep. Kathleen Passidomo — who tried to fast-track the fraud through the court system — is unlikely to say she was wrong (the same Rep. Passidomo who suggested an 11 year-old asked to be gang-raped because she was dressed like a “prostitute”).
But maybe there’s hope the banks themselves will realize it’s in their own best interest to start working in good faith.
Bankers are tired. Investors want the private MBS market to come to life again, and there’s no reason that it shouldn’t except for uncertainty on the part of other investors that they won’t be defrauded .. again. But now it’s been made clear there is a path to accountability; the settlement left no ambiguity that investor lawsuits are wide open.
Responsible banks run by responsible bankers should welcome this settlement, but also those lawsuits, because they provide a path to a return of confidence that the rule of law, and the fundamentals of the free market, rule the US. In much the same way that the first step to fixing an abandoned home is to rid it of rodents smart, responsible, respectable bankers have to realize ridding the system of human rodents is good for the banking system, good for the economy, and ultimately great for them.
I can’t stress enough how much I am not “anti-bank,” but I am anti-fraud. Real business people can’t compete with fraudsters because it’s impossible to beat Madoff’s returns. They should use this settlement as an excuse to step out of the woodwork and start to scream as loud or louder than Lynn has been over these past years.
For the sake of the economy, the banking system, and the families — and no, when you’ve done this for a few years it becomes impossible to forget the families, even when mired in financial and legal data — let’s hope banks take the opportunity they’ve been given to change their ways and clean up their mess.