By Cate Long
I dialed into a press conference today held by U.S. Congressman Brad Miller, a Democrat from North Carolina. He wanted to share his views on the suits filed by the Federal Housing Financing Agency (FHFA) against 17 banks over recovery on fraudulently misrepresented subprime mortgages. FHFA is seeking to cover losses on approximately $200 billion of mortgages purchased by Fannie and Freddie prior to their takeover by the government in the summer of 2008. Taxpayers have already covered $140 billion of FHFA losses from these bad mortgages and the amount is expected to go much higher.
I had met Congressman Miller several times on Capitol Hill when I lead Riski, the open source financial reform project, and I’d always been very impressed with his forward-looking efforts on the housing crisis. Once you are around Congress for a while it’s easy to see what special interests various members of Congress are promoting. Congressman Miller seemed genuinely independent and interested in America as a well-governed and fair nation. Sad to say these are not common traits on the Hill.
Congressman Miller, who has a law degree from Columbia University and a MBA from the London School of Economics, scoffed at the idea that banks could raise a defense of the-other-guys-were-doing-it-so-we-can’t -be–held-liable. Although he is not party to the litigation he said he reviewed many of the filings and case documents.
Peter J. Henning, writing in Dealbook, has an excellent legal analysis of the lawsuits filed by the FHFA in which he details their statutory basis. Read that piece if you are interested in the legal angle of the story. But it’s the crusading element of Congressman Miller that fascinates me. Members of Congress live and die by political contributions and it’s very rare to find a congressman willing to cross the banks, which are substantial donors. When I asked Congressman Miller about the Republicans on the House Financial Services Committee and their reaction to the FHFA lawsuits he said that he had just gotten back to DC and hadn’t been in touch with them but generally they were not supportive of the FHFA trying to make recoveries from the banks. He added that he and the Republicans also had no appetite for continued taxpayer bailouts of Fannie and Freddie.