Adam Levitin is a professor of law at Georgetown specializing in banking, bankruptcy, and commercial law. He also contributes to a blog called Credit Slips, which describes itself thusly:
A blog on all things about credit, bankruptcy, consumers, and financial institutions. We are nine academics who will use this space to discuss and debate issues not just for specialists but for anyone who cares about creating good policies in these areas.
Levitin – who, by way of full disclosure, was a student of Elizabeth Warren’s at Harvard and later worked with her on the Congressional Oversight Panel that oversaw the TARP bailout – points out that Scott Brown’s recently-disclosed details on his work as a real estate attorney included some work for some pretty unsavory characters.
His clients included local banks as well as some “mortgage companies,” including some that are no longer in business, as well as Fidelity National and First American, two large real estate services companies that provide a range of services, including relating to foreclosure. Fidelity National, is also the former parent of LPS, which owned DocX, the document forgery firm featured on 60 Minutes and home of the Robosign. LPS is under a consent order with the Federal Reserve Board for its servicing activities, and DocX was criminally indicted by Missouri (and subsequently settled). Brown was doing work for Fidelity National when it still owned LPS.
It’s not clear exactly what Brown was doing for these clients–title work sounds innocent and boring enough, and Brown certainly isn’t responsible for all of his clients’ misdeeds. But at the very least, Brown’s association raises a host of questions. Who were those “mortgage companies” that he worked for? … How many predatory loans did Scott Brown facilitate? How many of the loans where he handled the closing resulted in foreclosure? What would he say to those families that lost their homes to predatory loans?
I suspect that Brown’s reply to these questions would be “Aw shucks, I’m just a guy with a pickup truck with 238,000 miles on it who was helping people out by doing the paperwork on their real estate closings.” That’s not good enough. Either Brown was so inept that he didn’t see that the loans he was closing were becoming untenable or Brown saw the problem and didn’t do anything.
This isn’t a “gotcha,” exactly, as Levitin points out, but it does raise questions that should be answered.
Obviously as a legal matter, the attorney handling a real estate closing has no duty to shield people from making a bad business decision (particularly if he’s representing the bank). But there’s a character and ethics issue here. In the first Massachusetts Senatorial debate, Brown said that he thinks character is an issue and that it is the litmus test for being a Senator. Mere compliance with the law isn’t always a passing grade on character. I’d certainly like to know more about his real estate practice before concluding that he’s passed his own test.
At the very least, it looks like Scott Brown was riding the mortgage bubble, serving as a cog in the machine. We know that Senator Brown was carrying water for Wall Street when (as his singular notable Senatorial accomplishment) he weakened the Volcker Rule that was aimed at preventing federally-insured banks from engaging in risky heads-I-win/tails-taxpayer-loses trades. Was undermining the Volcker Rule just a continuation of a career carrying water for the banks?
In response to a comment arguing that an attorney in Brown’s position had no business getting involved in the wisdom of particular loans, Levitin further argues:
the job is how you define it. This isn’t a question of malpractice. It’s a question of ethics, which is about character. The argument you make is, by analogy, that the guy who makes sure the trains run on time has no responsibility for what the trains are carrying or that the ship’s captain doesn’t have a responsibility for what’s in his ship’s hold. That engineer or captain is not the same as the person who loaded the train or ship, but is part of the process. A lot of bad things happen in the world because of that attitude.
There’s more on this controversy at FireDogLake and Naked Capitalism. FDL argues:
I actually think this is more of an issue about Brown’s actions during the financial reform bill. He held out in the bill, getting a bank fee removed that would have paid for much of the regulatory measures, and weakening the Volcker rule to allow more proprietary trading among big financial institutions. So Brown was a cog in the great finance wheel when doing these closings and “title work,” and also when a US Senator trying to enable as much profit-earning risk in the big financial institutions as possible. A useful cog.
“A useful cog.” Surely, Massachusetts can do much better than that.
Get the surrogates going and the hell with the PAC ad ban. Let her pay money to charity for every ad.
It’s about him being part of the problem by profiting from representing mortgage companies in bad loans. Think of all the no-doc loans and crazy refinances that later were foreclosed on.
Was he the attorney on the same piece of property more than once? Was he profiting from people and mortgage brokers flipping properties?
When this was going on, when the pigs became hogs, Elizabeth Warren was calling attention to the inevitable. Where was Scott then.
What votes did he cast as a state senator and rep that favored his corporate/financial clients? How about in Washington?
What was his background in real estate law to qualify as the bank’s attorney? He was solo and worked out of his house. Not typical of a small local conveyancing attorney.
Just wondering. And easy for interested parties to research.
In order for this line of attack to work, you can’t speak in progressive language.
The loans were not “predatory”. They were made to “irresponsible borrowers”.
lenders who knew they were going to sell the note before the ink was dry.
Besides, isn’t Brown’s role like a fence of stolen goods? He didn’t actually steal anything, he just moved the property down the line.