House Speaker Nancy Pelosi and the other California Democrats are calling for an investigation into the foreclosure fraud scandal that has forced the nation's biggest banks to halt foreclosures in 23 states.
"It just shows the irresponsibility of the banks, so eager were they to securitize those loans they didn't care almost what they were," said House Speaker Nancy Pelosi (D-Calif.) in an interview with HuffPost on Tuesday.
Bank of America, JPMorgan Chase, and Ally Financial (formerly known as GMAC) halted foreclosures in 23 states after employees admitted in sworn depositions that they didn't verify information in thousands of foreclosure documents.
The California delegation sent a letter to Attorney General Eric Holder, Fed Chairman Ben Bernanke, and Comptroller of the Currency John Dugan demanding an investigation into "possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures."
In the Senate, Sen. Bob Menendez (D-N.J.) sent letters to Bank of America, JPMorgan Chase, GMAC, and 117 mortgage servicing companies demanding to know what they've done in light of the paperwork scandal. Menendez and Sen. Al Franken (D-Minn.) asked the Government Accountability Office to investigate as well, and Sen. Jeff Merkley (D-Ore.) sent a similar request to Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan on Monday.
"After all that has transpired in our economy, Wall Street should act responsibly toward and cooperatively with Main Street families," said Menendez in a statement. "This rushed and bureaucratic approach to actions as significant as foreclosures would suggest otherwise. I want to know how deep this problem goes and what safeguards are now in place to prevent unjustified rubber-stamp foreclosures from happening in the future."
Servicers' use of false affidavits to prove they have the right to foreclose recalls the predatory lending and "liar's loans" that fed the housing bubble in the first place.
"It really does show you, though, left to their own devices, [the banks] no sense of community, no sense of what's right for our country," said Pelosi. "Just get something so we can turn it into a financial instrument so we can short it or long it or whatever, and privatize the gain and nationalize the risk, both to the taxpayer, to the homeowner, to the consumer, it's stunning. This is a very big deal."
Michael Steel, a spokesman for House Minority Leader Rep. John Boehner (R-Ohio), said, "At a time when economic uncertainty and unemployment are putting great pressure on homeowners and the housing market, it is imperative that we get all of the facts about this situation, and quickly."