As reported by The Nation last week, CPD’s litigation against the federal government has revealed close collaboration between Wall Street lobbyists and top federal officials.

In October, CPD helped 10 of our partners file a Freedom of Information Act Request seeking all communications between the major Wall Street banks and the Federal Housing Finance Agency (FHFA) about the plans of cities like Richmond, CA, to reduce foreclosures and homeowner debt and stimulate local economies through the use of eminent domain. For the 15.7 million homeowners "underwater," or owing more on their homes than they are worth, eminent domain could help homeowners remain in their homes.

The FHFA failed to respond to our FOIA request and in December we partnered with the ACLU to sue the agency to force a response.

In response, FHFA turned over numerous friendly emails from one of Wall Street's primary lobbying arms - the Securities Industry and Financial Markets Association (SIFMA) - to top agency officials at the FHFA.

The emails show SIFMA urging FHFA to issue regulations prohibiting cities from using eminent domain to reduce the principal on underwater mortgages and help keep families in their homes. In March 2013, the head of SIFMA’s Securitization Group emailed FHFA’s top lawyer and told him that “a federal solution would be the only way to quell this menacing concept.” He urged FHFA to adopt regulations that would prohibit Fannie Mae and Freddie Mac from acquiring or guaranteeing any mortgages in cities that adopt local principal reduction strategies.

And, a few months later, the FHFA responded by publicly threatening to do exactly that.

Advocates are working to push incoming FHFA head Mel Watt, whose appointment was finally approved on Jan. 6, to prioritize the needs of homeowners over the profit margins of the big banks and permit localities to pursue principal reduction strategies free from threats.