Sen. Chuck Grassley, ranking member of the Committee on Finance, today made the following comment on a report released from the Government Accountability Office, "Tax Debt Collection: IRS Could Improve Future Studies by Establishing Appropriate Guidance."  The report is available here.  Grassley has written to the IRS regarding private contractors for debt collection. The March 5, 2009, IRS response to Grassley is available here.  The May 6, 2009, IRS response to Grassley is available here.

"According to this report, the IRS used a flawed study to justify ending its contracts with private agencies to collect owed taxes that the IRS wasn't collecting on its own.  The IRS knew the study was flawed because the GAO told the IRS how to do the study.  But the IRS didn't implement the GAO's recommendations to fix the study, even though it agreed with them.  The IRS used the results from the defective cost-effectiveness study to defend its decision to terminate the use of private collection agencies, even though that wasn't the primary purpose of the study.

"Union advocates, including members of Congress, Obama administration officials and the taxpayer advocate, tried to tell the public that IRS employees could collect the tax debts cheaper and better than private employees.  Yet, the IRS' own information shows that the fledgling pilot program was returning money to the Treasury and that private employees' quality ratings were consistently higher than that of IRS employees.  Union supporters' successful disinformation campaign ultimately hurts other taxpayers, as private agencies were collecting dollars that the IRS wasn't and isn't going to collect anyway."

"The IRS used a poor study to secure a task it said it could perform but hasn't.   As of the most recent fiscal year, unpaid tax debts equal $328.1 billion. Only $120.4 billion of that amount is deemed potentially collectible and IRS is not actively pursuing $27.4 billion that it says is collectible. These are significant increases from when GAO first started tracking these numbers.  So, not only has the IRS made no progress in reducing unpaid tax debt, but also we're worse off every year."

Sends letter to Securities and Exchange Commission, urging crackdown on bonuses

Waterloo, Iowa - Rep. Bruce Braley (D-Iowa) sent a letter today to Securities and Exchange Commission Chairwoman Mary Schapiro expressing outrage over the recently announced excessive Wall Street compensation and benefits.  This week, it was reported that Wall Street firms are expected to award $144 billion in bonuses to their executives.

"While our economy is still struggling to get back on its feet, I believe that such excessive compensation in an industry that contributed to our financial collapse is unconscionable," states Braley's letter.  The letter also states, "I firmly believe these firms could put these funds to better use as investment capital to assist small businesses, for job creation, and to put our economy back on track."

Braley urged Chairwoman Schapiro to expedite strict regulations to protect shareholders, consumers and investors, by cracking down on these excessive bonuses.  Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Braley supported, the SEC is instructed to create regulations that give shareholders more say over executive bonuses, increase the transparency of those bonuses, and allow for companies and shareholders to recover excessive executive bonuses under certain circumstances.

Braley's letter is below:

October 15, 2010

The Honorable Mary L. Schapiro

Chairwoman

Security and Exchange Commission
100 F Street, NE
Washington, DC 20549

Dear Chairwoman Schapiro,

I'm writing to express serious concerns over recent media reports suggesting Wall Street firms are on track to provide $144 billion in compensation and benefits, which is a record high for a second consecutive year.  While our economy is still struggling to find its feet, I believe that such excessive compensation in an industry that contributed to our financial collapse is unconscionable.

For the past several years, I have urged Secretary Geithner and the Administration to crack down on excessive compensation and provide accountability for the use of taxpayer funds.  I've also called on Attorney General Holder to investigate the potential criminal misuse of funds by AIG to provide bonuses to many of their most senior executives.  In Congress, I have worked hard to provide accountability for consumers and investors and I supported strong regulations in the Dodd-Frank Wall Street Reform and Consumer Protection Act to provide transparency and executive accountability to their investors as a means of reigning in risky decisions in pursuit of short term profits.

With the authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act, I urge you to expedite the issuance of strict regulations to protect investors and consumers and ensure that any compensation provided by these firms is warranted and not harmful to investor or consumers.  Furthermore, as some of the drivers of the economic collapse, I firmly believe these firms could put these funds to better use as investment capital to assist small businesses, for job creation, and to put our economy back on track.

Once again, I urge you to expedite the regulations contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act, and to ensure strong protections for shareholders, consumers and investors from such irresponsible executive compensation.  Thank you for your attention to this matter.

Sincerely,

Bruce Braley

Member of Congress

WASHINGTON, D.C. - Senator Tom Harkin (D-IA) joined five senators today in sending a letter to the Administration urging agencies to use their authority to address the burgeoning crisis in foreclosure processing.  In recent weeks, there have been widespread news reports of improper and inaccurate review of foreclosure documents and disregard for required procedure, which has led to the suspension of an estimated 200,000 foreclosure proceedings nationwide.  Last Friday, Senator Harkin sent a letter to Iowa's leading mortgage servicers supporting Attorney General Tom Miller's request that they stop processing foreclosures in Iowa until a systemic review of procedure can be conducted.

"The emerging details of the abusive and fraudulent practices of some mortgage servicers hurt not just American consumers trying to make ends meet, but also those buying foreclosed homes and the housing marketplace," Harkin said. "In the interest of American families, I encourage the Administration and regulators to use their authority to isolate the bad actors and stamp out these abuses, not just to restore balance to the marketplace, but to prevent widespread damage to the economy as a whole."

The full text of the letter the senators sent to the Administration follows.  

October 14, 2010

The Honorable Timothy Geithner
Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C.  20220

The Honorable Shaun Donovan
Secretary
United States Department of Housing and Urban Development
451 7th Street, S.W.
Washington, D.C.  20410

The Honorable Benjamin S. Bernanke
Chairman
Board of Governors of the Federal Reserve
Washington, D.C.  20551

The Honorable Jon Leibowitz
Chairman
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C.  20580

Mr. John Walsh
Acting Comptroller of the Currency
Administrator of National Banks
Washington, D.C.  20219

Mr. Edward DeMarco
Acting Director
Federal Housing Finance Administration
1700 G Street, N.W., 4th Floor
Washington, D.C.  20552

Dear Secretary Geithner, Secretary Donovan, Chairman Bernanke, Chairman Leibowitz, Mr. Walsh, and Mr. DeMarco:

You are no doubt aware of the recently reported improprieties in the foreclosure processes employed by some of our nation's largest mortgage servicers.  Unfortunately, these reports are consistent with complaints that we have heard from our constituents alleging behavior on the part of servicers and foreclosure law firms, popularly referred to as "foreclosure mills," that would constitute bad faith at best, outright abuse at worst.  All of these practices raise serious questions about the integrity of mortgage servicers' loss mitigation and foreclosure processes, from their modification procedures to their foreclosure pleadings.

There have been attempts to dismiss the reported violations as minor technical paperwork errors, and to employ the defense that these were harmless errors because the homeowners were in foreclosure and would have lost their houses anyway.  These are not technicalities, they are not isolated cases - it is likely that over 200,000 foreclosures have now been suspended - and these improprieties cast doubt on the foreclosures in question.  

Rather than a few rogue employees disregarding company policy, the policies themselves were flawed, indicating that there is a systemic problem with the manner in which loss mitigation and foreclosure operations are being conducted by most, if not all, mortgage servicers.  This pattern of behavior has undermined the integrity of the housing market, creating uncertainty for home sales and the availability of title insurance.  

The systemic problems that are being uncovered in the current mortgage market are remarkably similar to the predatory practices employed during the subprime mortgage crisis.  These difficulties stem from the fact that servicers lack the proper incentives to follow basic procedures required either by mortgage contracts, pooling and servicing agreements, or state and federal laws.  Homeowners have no leverage in the modification process and federal agencies (including the Treasury Department) have yet to impose meaningful penalties.  It is time for the government to restore some sanity and oversight to the housing market.  Your agencies are in a unique position to address this problem because your agencies have various authorities over practices at bank and non-bank mortgage servicers.

First, you have the authority to require loss mitigation prior to foreclosure to eligible homeowners facing hardship, where consistent with investor interests, subject to penalty.  Such a requirement would focus servicers' efforts to assist homeowners.  It would also establish clear repercussions for servicers who fail to participate in loss mitigation in good faith.

Second, your agencies have the ability to impose your own tailored moratoriums on foreclosures for certain identified lenders, pending assurances that such lender's paperwork complies with state and federal requirements; proper ownership documentation is in order; and all contracts and loss mitigation requirements under those contracts have been followed.  The banks are focusing solely on their affidavit processes, but a more comprehensive review is required.  Failures to comply with all of these requirements should be penalized.

Finally, your agencies have the authority to review and reform the financial incentives for servicers and foreclosure mills.  Mortgage servicers have been accused of imposing unfair fee arrangements in modification contracts and foreclosure pleadings, and foreclosure mills are paid on a per-case fee basis.  These arrangements benefit the mortgage companies to the detriment of homeowners.

Congress has a role to play in addressing this crisis as well.  But your agencies have tools at your disposal to address the substantial challenges facing homeowners in the mortgage market, and you are able to respond more nimbly than Congress to this emerging crisis.  The ample record of homeowner abuse should compel you to act expeditiously in the best interest of homeowners and investors.

Thank you for considering our views.  We await your response to the ongoing developments of the foreclosure crisis.

Sincerely,

Senator Tom Harkin
Senator Sherrod Brown
Senator Barbara Boxer
Senator Mark Begich
Senator Debbie Stabenow
Senator Jeff Merkeley

Cc: Mr. Timothy Massad, Chief Counsel, Office of Financial Stability, United States Department of the Treasury
Mr. David Stevens, Commissioner, Federal Housing Administration

October 8, 2010

Iowa effort part of national move to review documents, protect consumers

WASHINGTON, D.C. - In a letter to Iowa's leading mortgage insurers, Senator Tom Harkin (D-IA) today said he supported a request by Attorney General Tom Miller to suspend foreclosure proceedings after reports revealed allegedly improper actions and defective court documents.  Earlier today, Bank of America announced that it has suspended foreclosure proceedings in all fifty states while the bank examines foreclosure documents for errors.