As if the Obama Administration Revolving Door Could not Spin Any Faster………

Promontory Financial Group has hired Former SEC Chief Shapiro:

As regular readers may recall, Promontory Financial Group was one of the huge winners from the joke on the public otherwise known as the Independent Foreclosure Review. The only accurate word in that label, it turns out, was “foreclosure”.

As part of a series of consent orders issued to servicers in 2011, the OCC mandated that borrowers who had a foreclosure underway or completed in 2009 and 2010 could receive a review to determine if their foreclosure was handled improperly and caused financial harm. If so, they could receive as much as $125,000 in compensation.

Many observers, including yours truly, could see as soon as the reviews were announced that they were destined to be a sham, since the consultants hired to perform these assessments would be selected and pad by the banks, who would also be their immediate client. And after the reviews were hastily shut down, the revelations were even worse than even the cynics had predicted. Consultants like Promontory, who worked for three servicers, including Bank of America and Wells Fargo, ran up enormous tabs via being utterly incapable of organizing a process of this scale and complexity. Not that the bank cared, since they didn’t really want the work completed. Promontory racked up an estimated $1 billion in fees. Our whistleblowers say they completed only 4,800 borrower letters at Bank of America and may not have gotten through any at its smallest IFR client, PNC (in October of 2012, after over a year of work at PNC, Promontory said the work to dat needed to be scuttled since questions had been raised about the independence of the process. The reviews were shut down two months later).

So how is Promontory using all this lucre? Buying up even more former regulators to further its reputation as a connected insider. Mary Shapiro had barely left the SEC when she was nominated for a board seat at General Electric, which despite its image as a manufacturer, has for over two decades had nearly half its revenues coming from financial services. And now Shapiro has been signed by Promontory to help arm-twist regulators not to do their job.

This sort of incestuous corruption is a feature, not a bug.