Bank Lawyer's Blog

Florida Continues To Pummel Stern

Nearly two years ago, we noted that the Florida Bar had filed a complaint against former Florida Foreclosure King David J. Stern over alleged ethical lapses related to the meltdown of his foreclosure mill firm in the wake of a robosigning scandal. The wheels of justice grind exceedingly slowly (at least, they do in The Sunshine State), but last week, the Bar filed another whopper against Stern.

It took two years, but the Florida Bar has finally dropped a doozey of a complaint against former foreclosure king David J. Stern.

The 80-page complaint includes 17 counts or charges that Stern violated the Bar’s rules of professional conduct. The Bar alleges that Stern failed to properly supervise lawyers and non-lawyers at his firm and failed to halt regular violations of Bar rules.

The article summarizes the allegations made in the long complaint. Most have them appear to have been made public previously.

According to the newspaper, neither Stern nor his attorneys could be reached for comment (although another article states that Stern's lawyer, Jeffrey Tew, "told the newspaper Thursday that Stern has done nothing to warrant discipline"). Unfortunately for Stern, a former nemesis was ready and willing to pipe up with an opinion.

Former assistant state attorney general Theresa Edwards, who investigated Stern several years ago before being fired by the AG's office, said she thinks the bar should have acted sooner. (Contacted by the newspaper, the Bar declined, through a spokeswoman, to comment.)

"Considering the amount of money he's made, his bar license will be of little concern to him," said Edwards, who is now in private practice.

Biting off more than you can chew, then trying to gulp it down by cutting corners, appears, in retrospect, to have been a bad business plan. Then again, perhaps Ms. Edwards is correct. Perhaps he's made so much money that he won't care what the state does with his law license.

We'll see. At this rate, it may be another two years before this plays out. By that time, only crackpot bloggers may even remember who Stern was.

Tighten Up! No, Loosen Up!

The Obama administration’s recent call for mortgage lenders to loosen underwriting standards on residential mortgage loans to less-than-“Qualified Mortgagors” as long as the FHA (i.e., the American taxpayer) is taking most of the risk of default, generated some pretty strong reaction from the usual suspects.

"If that were to come to pass, that would open the flood-gates to highly excessive risk and would send us right back on the same path we were just trying to recover from," said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.

[…]

"There's always a tension that you have to take seriously between providing clarity and rules of the road and not giving any opportunity to restart the kind of irresponsible lending that we saw in the mid-2000s," said a senior administration official who was not authorized to speak on the record.

Ya’ think?

The administration is also purportedly urging the Justice Department to ease up on lenders who make loans in accordance with the administration-encouraged looser and goosier FHA underwriting critera. The FHA also claims that it hopes to encourage "by example" Fannie Mae and Freddie Mac to follow along. It's as if the subprime meltdown never occurred and Dodd-Frank was never passed, except for the fact that the federal banking regulators, including the CFPB, are taking a directly contrary approach to mortgage underwriting. Moreover, loan originators live in mortal fear of Freddie and Fannie repurchase requests, which have been massive, since those two publicly-controlled giants are the conventional residential mortgage market.

This whip-saw of inconsistency evidences a major example of cognitive dissonance.

Private reaction from bankers and bank lawyers with whom I attended the recent Texas Bankers Association Annual Legal Conference in Austin, Texas, was even more derisive.  Much time during that conference was spent parsing the nuances of “Qualified Mortgages” and “Qualified Residential Mortgages,” which will make qualifying for a residential mortgage loan much more difficult for many potential homeowners. In addition, the plethora of new regulations being spewed out by the CFPB makes consumer lending, including making single family mortgage loans, riskier and more expensive. The bottom line for a number of community bankers is that they will be making few, if any, residential mortgage loans, at least not directly. In addition, bankers who decide to make residential mortgage loans are definitely not crazy about making anything other than loans that will fall under the QM safe harbor.

I would say that it’s amazing that the administration could talk so glibly out of both sides of its mouth, except that it’s not at all amazing. It’s what these cynical, pandering clowns do as naturally as breathing in oxygen and exhaling carbon dioxide.

Loan Buybacks: The Next Hand

The "repurchase risk" for single family mortgage originators that we've discussed for, literally, years here on the blog was, for the most part, a risk faced by those who sold loans to (or serviced loans owned by) Freddie Mac and Fannie Mae. They are the 800-pound gorillas in that space.

Add a new gorilla to the jungle. He's a Texas banker we've discussed many times before.

In 2002 billionaire banker Andy Beal had his Beal Bank sue the Federal Deposit Insurance Corp. in a lawsuit that accused the FDIC of originating faulty subprime mortgages to unqualified borrowers. For six years Beal pursued this quest against his very own regulator, until the FDIC agreed to pay $90 million in 2008 to settle the case.

Now Beal has found another seemingly impossible mountain to climb: getting big banks like Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase & Co., to repurchase potentially faulty loans that were sold during the housing boom. According to Katy Burne at The Wall Street Journal, Beal is working to bring bondholders together  to investigate potential misrepresentations and contract breaches by the banks that sold residential mortgage-backed securities.

[...]

Some of the soured assets Beal purchased at fire-sale prices were residential mortgage-backed securities that were sold in deals in which banks made representations and warranties about loan quality and promised to repurchase those loans if the representations were no good. But in order to investigate, potentially declare a default and maybe launch lawsuits, holders of the securities like Beal need at least 25% of the voting rights in a trust.

The Wall Street Journal reported on Wednesday that Beal Bank holds more than $1 billion of these bonds, has been in contact with more than 20 bondholders, and signed on enough investors in seven of the 93 mortgage-backed securities held by a Beal Bank unit to proceed. Beal has probably already made lots of money off these investments but through this strategy he hopes to make even more. He is not the first person to pursue this kind of thing. The biggest such effort has been led by Houston lawyer Kathy Patrick, who has worked for big institutional investors like BlackRock and Pimco to pursue put-back claims and famously struck an $8.5 billion settlement with Bank of America. But these kinds of claims have proven very difficult to pursue.

Still, Beal seems to relish taking on impossible tasks. He once walked into a Las Vegas casino and challenged some of the best poker players in the world to some of the highest-stakes games ever played. It’s unlikely he is bluffing over this mortgage move.

Well, he didn't just "walk into" a casino and challenge the world's best poker players. He set it up in advance. They knew he was coming. Moreover, although he took some of the world's best for seven figures over the first round, Phil Ivy won that back and then some in the final round. He's still a legend, but he doesn't need the embellishment. To say he's "not bluffing" is entirely accurate.

Following Andy Beal's beat down of the country's biggest banks is going to be a hell of a lot more fun than watching Aunt Fannie and Uncle Freddie grow gray and wither. Stay tuned.

Pushing Back On Eminent Domain

The push by some local governments, like San Bernardino, California, to consider seizing underwater mortgages form lenders through the power of eminent domain is generating push-back at the national level, according Housing Wire.

Rep. John Campbell, R-Calif., introduced federal legislation Thursday to prohibit the government from backing mortgages in areas where underwater loans are seized through eminent domain.

The bill amends Fannie Mae and Freddie Mac charters, forbidding them from financing loans in counties or cities that cleared such eminent domain plans within the previous 10 years. It also keeps the Federal Housing Administration and the Department of Veterans Affairs from insuring mortgages in these areas.

The government financed roughly 95% of the mortgage market since it crashed in 2007.

The reasons for the enactment of such a bill are strong.

Studies showed if the eminent domain plan grows widespread, the GSEs could lose up to 30% on the mortgage bonds they own. Meanwhile, industry groups allege MRP and its investors could profit 30% of the loans the governments acquire for it.

MRP is the private enterprise staffed by former Clinton administration cronies that hatched this plan and has been trying to sell it to various municipalities. As Housing Wire notes, the profits MRP would make on the scheme, at the expense of the American taxpayers (who have bailed out Fannie and Freddie), are hefty. It's enough to irritate a person if he or she paid taxes. Half of the American public does not, so maybe enough people simply don't care that the rest of us stand to lose money as a few local governments take "action" that benefits the few at the expense of the many. Just like Wall Street.

If Campbell's bill is enacted, it would crush the budding movement before it could flower. Even the threat of it might put a damper on the enthusiasm of municipalities to pursue the scheme. At least we can hope.

As Housing Wire's Jon Prior observes, nothing is likely to happen until after the election. Even then, it might take a new Congress to push it through next year. In the interim, we'll be paying close attention to this bad idea.

Concentrate On This

Last October, when MetLife left the mortgage origination and servicing business, I pointed out the sad fact that 70% of the home loans originated in 2010 were made by five large financial institutions. Since then, the concentration of power has only accelerated. On top of the dog pile is Wells Fargo, which made one-third of all home loans in the first six months of 2012. Wells, Chase, and U.S. Bancorp combined made half. According to a recent Bloomberg article, this concentration is starting to worry people in high places.

The concentration in the mortgage business has drawn warnings from the inspector general for Fannie Mae and Freddie Mac, the head of Ginnie Mae, Fitch Ratings, and congressmen, including one from Wells Fargo’s home state, about growing risks to borrowers, taxpayers, investors, housing markets and the financial system. Scenarios include a setback or strategy shift at Wells Fargo that could choke off credit for homebuyers and compel the U.S. to again pump in money to keep the housing market from seizing up.

“A concentration of issuers creates an oligopoly,” said Bill Frey, head of Greenwich Financial Services LLC in Greenwich, Connecticut, whose firm invests in, creates and trades mortgage bonds and advises bondholders. The result will be “higher mortgage costs for generations, as well as slower economic growth. Housing is the keystone of our economy.”

While there's the obvious sense of irony when Aunt Fannie and Uncle Freddie bemoan the concentration of power in the residential lending sector resting in hands other than their own, our amusement shouldn't deter us from taking their warnings seriously. Notwithstanding those "experts" who think that the U.S. would be better off if there were just a few big banks left, akin to the situation in "Hoser Land" Canada, many of us in the land of the free prefer a "more's the merrier" approach to banking.

“The nation benefits from a broadly distributed mortgage- finance system,” said Stevens, whose organization represents more than 2,400 firms involved in housing. “If the market is too concentrated on one company, and if they were to change their strategy around mortgage originations or got into financial trouble and had to leave the market altogether you could have market disruptions.”

[...]

Edward J. DeMarco, acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has said he’s concerned about concentration and urged officials in a May speech to consider changes. Freddie Mac -- with Fannie Mae, the recipients of nearly $190 billion in government aid --bought 82 percent of the single-family loans it purchased in 2011 from 10 firms, filings show, with 40 percent from Wells Fargo and JPMorgan.

Fannie Mae and Freddie Mac rely on Wells Fargo and other large servicers to collect payments for the loans they guarantee. That makes them vulnerable to the business practices and financial health of a few large banks, said Steve A. Linick, the Federal Housing Finance Agency’s inspector general. The top 10 serviced 75 percent of single-family mortgages guaranteed by Fannie Mae, according to company filings.

“A limited number of servicers poses a safety and soundness risk to the enterprises,” Linick said in a phone interview. This “ultimately could cause losses to taxpayers.”

The effect on servicing has also drawn the attention of Ted Tozer, president of Ginnie Mae, a government-owned corporation that guarantees mortgage bonds holding loans backed by the Federal Housing Administration and other agencies.

“If the quality of servicing deteriorates, you have to deal with it and that puts a lot of oversight responsibility on us, no question about it,” said Tozer, whose Washington-based operation guarantees more than $1 trillion of mortgage-backed securities. “That’s one of the big challenges.”

So, many "experts" agree this concentration is a bad thing. Therefore, what do they propose to do about it? The answer, for the time being, is Nada.

For now, regulators and lawmakers are more focused on keeping money flowing into home loans and are unlikely to force change, according to Bart Naylor, who works on financial policy at Public Citizen, a Washington-based advocacy group.

“To the extent a regulator wants there to be a thriving mortgage market,” they may defer to the largest lenders, Naylor said. “However, they should be cautioned that leading market share has led to oblivion.”

In other words, don't expect anyone to move to oppose this concentration anytime soon. In the interim (if the "interim" ever truly ends), expect the big to get bigger, concentration to continue unabated, and the lovers of the Canadian bacon banking system to have reason to feel warm and fuzzy.

It's not a question of our "fearless leaders" being asleep at the switch. It's that they see the train barreling down the tracks, know that there's a good chance that it may run off the rails, yet, instead of throwing the switch, they avert their eyes and pray for divine intervention.

I don't like the looks of this trend.

Ammunition For Loan Buyback Plaintiffs

A couple of years ago, I related a conversation I had with a banker whose bank was being sued by FNMA to force repurchase of loans that, FNMA alleged, breached the representations and warranties the bank made when it sold the loans to FNMA. The bank was opposing the buyback requests, in part, on the argument that the alleged breaches of warranties were not connected to the reasons that the loans defaulted and, therefore, did not cause the losses that FNMA alleged that it suffered. I told him at the time, that FNMA didn't care about connecting the dots of causation. It's position was (and presumably still is) "if you break, you must retake."

A blurb on Housing Wire's site today alerted us to a recent Southern District of New York court decision that supports the position of FNMA (although the lawsuit does not involve FNMA). Housing Wire linked to an article posted online by law firm O'Melveny & Myers that discusses the decision and its implications. Following are the opening and concluding paragraphs of that article.

On June 19, the Southern District of New York ruled that a residential mortgage originator that securitized those mortgages into mortgage-backed securities (“MBS” or “notes”) could be liable for alleged breaches of representations and warranties it made, to the insurance company that insured principal and interest payments to investors in the MBS, and could be forced to repurchase non-conforming mortgages even if (a) the breaches did not cause the underlying mortgages to default and (b) the underlying mortgages have not yet defaulted.

[...]

Currently there are many dozens -- if not hundreds -- of lawsuits against mortgage originators, seeking hundreds of billions of dollars due to alleged misrepresentations about the quality of mortgages sold into securitizations. Such suits can be brought by various parties, including, among others, an investor who purchased the MBS, the insurance company that insured the underlying mortgages and/or principal and interest payments on the MBS, the guarantor of the MBS, the servicer of the underlying mortgages, and the trustee of the mortgage pool. All of the above categories of plaintiffs will undoubtedly argue that the Syncora decision should apply equally in those cases. Defendants will counter by pointing out that with its emphasis on insurance principles, Syncora, on its face, makes clear that these different plaintiffs should not be conflated as their legal rights may vary. The case also demonstrates that the language used in the related documents can be determinative, as the court specifically relies on the terms in the operative agreements and observes that the parties could have included different language in their contract that could have provided for other rights and remedies.

Institutions facing such lawsuits may wish to re-evaluate their exposure, and possibly adjust reserves set aside to cover such risks, based on the type of plaintiff and the specific language in the securitization agreements at issue.

While I haven't yet read more than the synopsis provided by O'Melveny and Myers, it seems to me that FNMA's status as the guarantor of mortgage-backed securities secured by the loans that it buys, as well as the broad wording of FNMA's Sellers and Servicers Guides regarding the breadth of the warranties and representations that loan sellers and servicers make to FNMA, will make this decision an important arrow in FNMA's legal quiver. Moreover, the law firm's admonition to potential (and current) defendants to "re-evaluate their exposure" is wise. If the defendants don't "re-evaluate," their outside auditors are likely to do it for them.

Loan Repurchase Liability Balloons For BofA

About a year ago, we discussed how much Bank of America appeared to be flailing about in its attempts to get its rams around its total exposure to loan repurchase demands by Fannie Mae. According to a recent Housing Wire article by Jon Prior, the "bid-asked gap" between Fannie Mae and BofA on the total amount of repurchase liability is pretty large. So large, it appears, that BofA is telling Aunt Fannie, "Sue Me!"

The bank and the government-sponsored enterprise disagree over $7.9 billion in mortgages Fannie claims BofA should buy back because of faulty origination practices, up from $3.7 billion at the end of last year. The bank said it should not have to buy back the loans because borrowers made at least 25 monthly payments on them.

The claims stem from mortgages originated in 2006 and 2007, BofA Chief Financial Officer Bruce Thompson told investors Wednesday.

"We clearly have a disagreement," Thompson said. "Either they bring an action or there would be a settlement. Those would be the two ways this would get resolved."

Throw Freddie Mac into the mix, and repurchase claims rise to $11.1 billion. That's a chunk of change, even if BofA has already reserved $15.9 billion for repurchase claims. Moreover, private label investor claims are also growing, nearly doubling to $8.6 billion. Working through this mess has been painful (costing the bank $2.6 billion in the last quarter) and it's obvious that the pain for BofA will continue for some time to come.

Several years ago, Francine McKenna was berating the large audit firms for not raising the red flag regarding loan repurchase risks. I'd been raising the red flag on this blog as far back as 2005. Maybe we were both more lucky than smart (certainly that's true in my case). On the other hand, if even a quarter-wit like the author of this blog saw this iceberg looming in the distance, you have to wonder how the Masters of the Universe who ran one of the world's largest financial insitutions acted like the crew of the Titanic and ran headlong into it.

How About Having Some Grey Matter Occupy Your Cranium?

In a story that highlights the utter mindlessness of a portion of the Occupy [Insert Placeholder] Movement, today's American Banker reports that an Occupy Movement organization, Neighborhoods Organizing for Change [that we've been waiting for?], decided to occupy a house in Minneapolis after the lender foreclosed on the home and the borrower was evicted. The lender foreclosed for a very simple reason that was outlined in three short sentences.

In this case, the former homeowner, David Cruz-Sanchez, got a $194,000 mortgage to buy the house in July 2007. He stopped paying his mortgage in August 2010 and Freddie took the home back at a sheriff's foreclosure auction in August 2011. Cruz-Sanchez and his wife continued to live in the home until April when they were evicted.

The couple's adult children had contacted a local nonprofit, Neighborhoods Organizing for Change, which decided to occupy the house to protest foreclosures even though Freddie had already legally taken back the property.

The couple lived almost two years in the house without paying a dime to their lender. Sounds like a gross injustice to me. To the lender, that is.

Freddie Mac, which owned the loan and now owns the house, told reporters that the servicer tried to contact the borrower to discuss alternatives to foreclosure, but that the borrower never responded to the servicer's outreach efforts. If there ever was a case where protests were not justified, this was it. Nevertheless, like the nimrods who occupied a Wells Fargo branch in Denver to protest Bank of America's practices, the activists here don't care about equities, just mindless rage. They broke into the house previously by tearing boards off of the windows, and the lender has replaced the boards with steel plates. Nevertheless, the Occupy folks intend to make another assault on the home. I guess they'll bring acetylene torches and crow bars with them, this time.

I realize the political realities in a state like Minnesota, where there are many Blue State Bubble Babies who see nothing wrong with destroying someone else's property as long as the "someone else" is an enemy of the state, like a bank or any entity associated with banks. Nevertheless, sooner or later,the police have to enforce the law, don't they? If not, owners will start resorting to "self-help" remedies like guys in aviator sunglasses, just back from the Hindu Kush with a bad attitude and an M4, or--my personal favorite--a pair of Rottweilers named "Starsky" and "Hutch" who haven't been fed for two days. History teaches us that if the King's Hand does not dispense justice, lesser, though, firmer hands will. At some point, trespassing and damaging property rises to level of a felony, and the crime ought to be taken seriously.

As to those who claim that any crime is justified by the Occupy crowd because no bankers have done a perp walk, I answer: didn't your mommy tell you that two wrongs don't make a right? No? Well, since I'm sure you're still living at home, why don't you call her on the cell phone she paid for and ask her?

The Servicers Settlement Disconnect

The recent announcement that Bank of America cut a "side deal" to earn extra brownie points (and lower penalties) in the robo-signing settlement with state attorneys general touched off a round of criticism. As reported in The Wall Street Journal, investors are squawking about making them pay for the errors of the loan servicers by threatening bond principal repayments through mortgage principal reductions. In response, The White House claimed that the settlement terms would not require mortgage principal reductions in each case.

The Obama administration official said that principal reductions will be done only when there is a benefit to investors, meaning that the cost of the principal reduction will be less over time than taking the loan through foreclosure, and the principal reduction is done in accordance with investor contracts. "The misunderstanding somehow that the investors will be paying the banks' share is just false," Secretary of Housing and Urban Development Shaun Donovan said when the deal was announced last month.

Wait a minute: isn't that analysis supposed to be happening anyway? Isn't that what savvy servicers like Ocwen were being praised by the "main stream media" for three years ago? If they're already doing it, what does the settlement accomplish?

We suspect that what it accomplishes is "encouraging" (wink-wink, nudge-nudge) servicers to write down the principal balances of the loans they hold in portfolio. Investor-owned loans will be handled according to a net-present value analysis outside of this "settlement process," which is what the Wall Street Journal's article's quotations from other servicers, such Ally, suggest. In turn, by "taking one for the team," the loan servicers will give the Obama administration and the attorneys general political talking points in an election year.

Interestingly, the government owned "conserved" GSEs aren't jumping on the principal write-down bandwagon. In fact, they've driven that wagon into the ditch.

[FHFA chief Edward DeMarco} firmly holds his position on principal writedowns:

There is no question that underwater borrowers in California would benefit from other taxpayers across the United States paying off the underwater portion of their mortgage debt. My obligation to those taxpayers, including those living in California, is to ensure that the assistance offered to borrowers facing difficulty in making their mortgage payments maximizes the opportunity to assist those borrowers at minimum cost to taxpayers.

The numerous foreclosure avoidance options offered to borrowers whose loans are owned by Fannie Mae or Freddie Mac, including multiple loan modification options, do just that. We will continue to consider alternatives as they are proposed, but I will not further delay foreclosures provided those borrowers have been given a meaningful opportunity to avail themselves of a loan modification or some other suitable foreclosure avoidance alternative.

So, the state and federal governments stick it to the banks' shareholders but won't stick it to the taxpayers, at least not so openly, in an election year. We get it.

What we don't get is how mandating principal write-downs on underwater mortgages is a logical penalty, or appropriate remedy, for false attestations in foreclosure documents. We understand--and support--fining the lenders and individuals involved, and prosecuting those offenders who've committed perjury or other criminal violations. Those are punishments appropriate to the offense. As for the "injured parties," why not require that either their foreclosures be halted or set aside (if possible) or that they be identified and directly compensated monetarily by the offending servicers on a case-by-case basis? Aren't those more logical, equitable remedies that fit the offense?

Giving people who don't pay their mortgages a benefit that people who pay their mortgages do not receive may serve a larger economic policy agenda, but shouldn't that policy be implemented openly through legislation, either at the state or federal level? Oh, yeah: that would involve spending tax dollars and no one has the political will to do that in an election year, likely because (A) supporters couldn't get the votes to pass such legislation in the first place and (B) even if they did pass it, it would be unpopular with the majority of taxpayers who don't want to fund such relief, as Ed DeMarco correctly observes. Therefore, it's a backdoor means of creating popular "buzz" in 2012.

The icing on the cake is that, according to a Brookings Institution economist, only 5% of the nation's 11.1 million underwater homeowners would get a write-down under the terms of the settlement. That may or may not be an understatement, but it's my guess the final number is not going to be substantially higher once the dust settles. Then again, none of this is about anything other than smoke and mirrors, is it?

Update: Windy City and Windy Lawmakers

On the theme of "The Beat(ing) Goes On," we note the following:

First, the FHFA, parent of insolvent Fannie Mae and Freddie Mac, continues to slug it out with the City of Chicago over that city's requirement that lenders who have not yet foreclosed on vacant homes are nevertheless responsible for registering with the city, paying a fee, and maintaining the property (or facing fines). Freddie this week started requiring servicers of loans subject to the law to pay the fees under protest or not be reimbursed. As reported by Housing Wire, the effect of this battle is to slow down the already glacial pace of foreclosures and OREO disposition in the city. As to pro-consumer types who think that's a good thing, I remind you that if you're a taxpayer, it's not a good thing. As anyone who hasn't lived in a cave for the last few years understands, the American taxpayers are stuck with the tab for losses at Fannie Mae and Freddie Mac. If you're not a taxpayer, then it's a problem for the rest of working stiffs.

On another matter, Congressman Darrell Issa has apparently uncovered documents that directly link former Countrywide founder Angelo ("The Tan Man") Mazilo to the "Friends of Angelo" loan program that benefited members of Congress with favorable home loan terms.

Issa is working with Mozilo's attorneys at Irell & Manella to schedule questioning over the program, according to a letter provided to HousingWire. Since 2008, Issa pushed the Committee on Oversight and Government Reform to investigate the "Friends of Angelo" Countrywide program and uncover which lawmakers allegedly received heavily discounted mortgages in return for access.

[...]

"Documents obtained by the committee show that former Countrywide Chief Executive Officer Angelo Mozilo personally referred government officials and other individuals positioned to benefit the company into the VIP program, known internally as 'Friends of Angelo,'" according to the letter.

As we noted a couple of months ago, this is incredibly old news that, based on the complete lack of ethics sanctions so far, is unlikely to to lead anywhere other than to a pile of political hay in an election year.

Certainly, we expect an ethics committee than ran off the rails trying to investigate Maxine Waters' more obviously questionable activities to wake up and look deeply into whether, six years ago, four House members got their discount points waived or an interest rate that even Warren Buffet couldn't garner. Of course, we also expect Bill Clinton to swear off sex and enter a Franciscan friary next week.

We note that Clinton is still nowhere near any Franciscan friars.