It goes without saying that Washington's proverbial revolving door provides some of the best and brightest regulatory bureaucrats a portal to greener pastures. When they leave "public service" for another calling they invariably tip toe down a path to a pot of gold that translates into cushy jobs replete with a six-figure salaries and all the perks and privileges afforded to those who land in the Beltway's magical corporate kingdom. It's a land of financial milk and honey that draws the likes of former SEC top enforcement cop Robert Khuzami -- once considered a bogeyman by Wall Street A-Listers -- who parachuted into the law firm of Kirkland and Ellis to work his five million dollar magic as part of their white collar defense team. His new job: sharing all he's learned about how to defend rich and powerful corporations from the likes of, well... his former self.
But when a mere mortal tries to pass through this same swiveling glass portal the revolving door suddenly becomes as rigid as the vault doors guarding Superman's Fortress of Solitude.
That's precisely what happened to writer and artist, Sherry Hernandez, and six activist colleagues who got stuck in that revolving door, literally, then carted off and arrested after a symbolic protest at the white shoe law firm, Covington and Burling, in downtown DC on May 22, 2013. It was part of three days of protest targeting the Department of Justice for its lackluster response to the foreclosure shenanigans of the major banks and Covington, as many know, is not only the incubator of much regulatory legal talent like Eric Holder, current Attorney General, but represents some of the nation's biggest financial institutions and that includes Bank of America, among others. It seems that this is a relationship a little too close for comfort when viewed through the eyes of the millions of homeowners already forced out on to the street or living in a stress-filled limbo waiting for the foreclosure ax to drop.
Sherry Hernandez is one of those millions trying to negotiate a fair and just modification while fighting to keep the eviction wolves away from the front door. But it's like Sisyphus trying to roll a modification stone up a steep hill. You seem to be making a bit of progress and then, whoops, that rock takes an abrupt backslide to square one and despite shouting from a moral high ground about how Mega-Bankers were the recipient of all that marvelous green stuff showered on them by the U.S. Treasury, in the end, it all falls on deaf regulatory ears. These same institutions continue to line their pockets with profit and forget about any of this trickling down to cash-strapped homeowners. Au contraire, this industry seems much more attuned to pushing foreclosures as a way to put more "product" on the market for investors (many of them from overseas) willing to swoop in and pick up bargains for pennies on the dollar, flipping them en masse for enormous profits or bundling them into rental properties to turn former homeowners into serfs renting at the pleasure of a new landlord class with easy rights to evict if a rental payment or two is missed. No messy chains of title or robo-signing issues to deal with.
Sherry's story follows an all too familiar trajectory and one that any homeowner who's had the misfortune of dealing with nobody's-favorite-mortgage-company, Countrywide Financial, can relate to. Countrywide was an outfit cast in the Enron mold, headed by the now-disgraced "entrepreneur," Angelo Mozilo, who many feel should have sat in the criminal dock rather than slipping away to a comfortable retirement forking over just a bit of his ill-gotten financial gains to the SEC. No justice there.
In 2008, Sherry and her husband found themselves in a knock-down dragged out fight with Countrywide and Bank of America (which had acquired the lender that same year) over predatory lending practices that included pumping up interest rates to unconscionable levels and laying down unforgiving pre-payment penalties and it got so bad that the Hernandez's took Countrywide/Bank of America to court charging fraud and "bad faith." This court initiative allowed them breathing room to try and negotiate a new, more tolerable loan and by 2009 they seem to have found an option with CitiMortgage. But in the topsy-turvy world of mortgage lending what the lender says you'll get is not necessarily what you end up getting and after giving the Hernandez's a 3-month trial modification their loan was dutifully sold off to PennyMac, a company put together by a group of executives that cut their mortgage teeth at, yes, the aforementioned Countrywide.
PennyMac turned a deaf ear to their pleas for fair and equitable treatment and after playing the now-you-see-it-now-you-don't modification game (Sherry alleges PennyMac was never serious about settling) they went straight for the foreclosure jugular. It was around this time, the summer of 2011, that the previously filed court case against Countrywide and BoA was put back on the court calendar and despite the on-going fight with PennyMac the Hernandez's were able to win one sweet victory, forcing defendants Countrywide and Bank of America to formally "apologize" for dabbling in predatory lending practices and wound up paying the couple an undisclosed amount in damages.
It was a given that Sherry Hernandez, now a seasoned anti-foreclosure fighter, would join up with the five hundred other activists from around the country for three days of protests last May organized by the Home Defenders League and Occupy Our Homes. The demonstrators -- many, low income homeowners of color -- camped out in front of Eric Holder's workplace calling for the criminal prosecution of Mega-Bankers and demanding that the financial institutions they helm offer a life preserver to homeowners whose heads they've kept underwater for so long.
For me, the protesting tumult outside of DOJ seemed to have a familiar feel ring to it, resonating with previous mass protests of the civil rights and anti-war variety and the more I thought about it the more I kept hearing Bob Dylan's poetic paean to these social upheavals: "The Times They are a-Changin'."
Come senators, congressmen, please heed the call
Don't stand in the doorway don't block up the hall
For he that gets hurt will be he who has stalled
Well, on May 22, the folks standing in the doorways and blocking the hall weren't our elected leaders they were Sherry Hernandez and her colleagues who had migrated from the main protest to make their case over at Eric Holder's old haunt, Covington and Burling, just a stone's throw from DOJ. Incidentally, Covington is now where Holder's colleague, Lanny Breuer, former head of the DOJ criminal division is ensconced -- big surprise -- as part of the firm's white collar defense division (remember his "too big to jail" appearance on PBS's Frontline series?).
The demonstrators managed to block the revolving doors holding signs that read "Stop the Revolving Door" (which they did, briefly) providing a very visual metaphor about how and where the beltway's political rubber meets the corporate road. Employees of the firm, daresay, were none too happy about the intrusion and quickly summoned some muscle but when the DC cops arrived on the scene they were a bit confused and hesitant about making any arrests. According to Sherry they were implored by the under-siege Covington staff to take in the perps with the admonition, "if you don't arrest them, they'll just do it again." Yes, indeed.
A Covington spokesperson did not respond to a request for comment.
The so-called "Covington 7" have a court date on October 7, 2013 to answer charges of unlawful entry. Despite the arrest, however, none have lost their enthusiasm for marching to the same beat that propelled previous mass protest movements and are committed to making this movement, for homeowner's rights, one that will rattle the walls at the Department of Justice. One can only hope that those walls rattled enough to wake up a sleeping Eric Holder at least long enough to have initiated a criminal inquiry into the behavior of JP Morgan Chase traders.
The AG, Eric Holder, is around my age and I'm sure he was impacted by the same turbulent events of the 1960s and 1970s that I lived through. Perhaps he also remembers the prescient sentiments voiced in Dylan's the Times They are a-Changin'?
The line it is drawn and the curse it is cast, the slow one now will later be fast
As the present now will later be past, the order is rapidly fadin'
And the first one now will later be last, for the Times They are a-Changin'.
One can only hope he views these protests in the proper historical context.
Joel Sucher, a filmmaker with Pacific Street Films in Hastings-on-Hudson, N.Y. is working on Foreclosure Diaries, a documentary about the financial crisis. He's blogged in the past for American Banker, is a contributing blogger for The Huffington Post and is currently working on a book, Intent to Accelerate: Reflections on the Foreclosure Crisis.