The official in charge of making sure Bank of America complies with terms of its record $16.65 billion settlement is a 35-year veteran of mediation, playing roles in major cases involving the likes of Microsoft, Visa and MasterCard, and even Bank of America itself.
Eric Green, 67, a Boston law professor and principal for a dispute resolution firm in that city, now oversees the Charlotte bank’s requirement to provide $7 billion in consumer relief to struggling borrowers as part of the settlement with the federal government.
In that role, he can give – or withhold – credit as the bank makes mortgage modifications and gives home loans for lower-income borrowers, among other forms of consumer relief. The bank has four years to earn its $7 billion in credit.
Green said his responsibility is to ensure the consumer relief is provided in a way that’s consistent with what the bank and U.S. Department of Justice agreed to.
“The people we’re going to be trying to help are the people in greatest need,” he told the Observer Friday. “They either lost their houses or are in danger of losing their houses. They desperately need help right at the core of what it means to be a viable and healthy family.”
He also acknowledges the limitations to his powers. For instance, he said it won’t be up to him to pick the borrowers Bank of America can provide relief to.
“The only power I have is the power to say, ‘You’re not doing it right. You can’t get credit for this.’
“I have the responsibility to make sure that it’s done in a way that’s consistent with what the Department of Justice and the bank have agreed it will be.”
Green is no stranger to Bank of America. He has served as mediator on various cases involving the bank as well as FleetBoston Financial, which Bank of America acquired in 2004.
In 2011, a federal judge approved a $410 million settlement in a class-action lawsuit involving roughly 13 million Bank of America customers affected by debit card overdrafts. The suit claimed the bank processed its debit card transactions from highest to lowest dollar amounts in order to maximize overdraft fees customers paid.
That settlement sparked criticism because it gave some customers only a fraction of what they paid in overdraft fees.
Green, who was involved in the mediation of that deal, points out that it was seen as a large amount when it was struck.
“At the time, it was a record-breaking, amazingly large settlement that I think shocked most observers who saw it,” he said.
“Settlements are compromises. The plaintiffs could have gotten nothing.”
It’s not uncommon for the Justice Department to appoint a monitor to oversee its settlements. Similar deals reached with Citigroup and JPMorgan Chase & Co. over the past 12 months also have monitors.
Green said he doesn’t believe he will be monitored, though.
“I have been told that the Department of Justice will not be overseeing me” because of laws that restrict it from doing that, he said. “So they’ve made it clear to me that they will not be directing me or overseeing me.
“I don’t think there’s anybody monitoring the monitor.”
Four years to comply
Bank of America has until Aug. 31, 2018, to provide its consumer relief. Of the settlement, $9.65 billion will be in cash payments to various federal agencies and six states, with the rest in consumer aid.
Critics have said more of the settlement should go to help consumers hurt by the housing meltdown.
Green said he did not play a role in drafting the terms of the relief or in mediating the settlement. He also said he’s not sure if he can set benchmarks that the bank has to meet before its 2018 deadline.
“That’s a good question,” he said. “I’m not sure yet exactly what is contemplated under the settlement agreement. I’m still studying it.”
If Green determines Bank of America has not complied by the deadline, the bank would be required to make cash payments equal to its shortfall. That money would go to organizations that provide housing counseling and foreclosure prevention, among other things.
Al Ripley, director of consumer and housing affairs for the North Carolina Justice Center, said he’d also like to see Green try to improve how the bank services its mortgages.
“We still get complaints about Bank of America’s mortgage servicing,” Ripley said. “The classic complaints we get are loan modification procedures and policies not being followed, borrowers who are still receiving foreclosure notices at the improper time and foreclosure actions being improperly handled.”
Dan Frahm, a spokesman for Bank of America, said the bank is always working to improve its customer experience “and we have made significant progress, including helping an industry-leading 2 million customers avoid foreclosure and remaining compliant with the (Consumer Financial Protection Bureau’s) mortgage servicing standards.”
Green, who said he learned Thursday that he was picked as monitor, said he’s still digesting the settlement and its many terms.
“I’m just beginning to understand the exact dimensions of my job as the monitor,” he said.
According to a Justice Department official, Bank of America recommended potential monitor candidates, including Green. The department reviewed the candidates, including making sure “the choice was ethical and appropriate,” and picked Green for his “vast experience overseeing complex financial matters.”
Green is a professor at Boston University School of Law and principal for dispute resolution firm Resolutions.
Green said he owns no stock in Bank of America and has no family members who work for the bank. He also said he has not discussed his compensation yet with the bank. Under the settlement’s terms, the bank must pay all costs associated with the monitor, who has to be independent of the bank.
Also, Bank of America can’t retain Green to represent the bank “in any capacity” within two years after the bank satisfies the consumer relief requirements, according to the settlement.
Green said he’s doing mediation work for bank clients, although he declined to name them. He said that, according to the Justice Department, he’s allowed to continue that work as he monitors the settlement.
Within 180 days, he will be required to issue his first quarterly report on the bank’s compliance.
As he prepares to monitor his first Justice Department settlement, he said he wants the consumer relief to make a difference in the lives of people hurting in the wake of the housing downturn.
“Here we have a chance to take $7 billion, the largest consumer relief fund in history, and get it to the people who are in most desperate need for help,” he said.