Settlement Release Looks Tight

Big breaking news about the long-fought over bank settlement: senior sources high up in the negotiations have outlined the terms of the legal release. Here's what I was told:

1. No release on any fair housing, fair lending, or civil rights claims.
2. No release on any Federal Housing Finance Agency or Government-Sponsored Enterprise claims.
3. No release on any Consumer Financial Protection Bureau claims (which would admittedly be modest, since the Bureau was only established in July 2011).
4. No release on tax liability claims.
5. No release on criminal liability claims.
6. No release on SEC claims.
7. No release on National Credit Union Association claims.
8. No release on FDIC claims.
9. No release on Federal Reserve claims.
10. No release on the "vast majority" of origination claims.
11. No release on the "vast majority" of securitization claims, including all claims of state pension funds.
12. No release on legal liability surrounding Mortgage Electronic Registration Systems (MERS).

According to these (two) sources, the release is almost entirely confined to robosigning cases.

Now, I haven't seen the actual language, so I can't verify all this, and I don't know what the phrase "vast majority" means. I also don't know if every player in the negotiations is 100 percent signed off on it. But I have a lot of trust in my sources that this real and that they wouldn't be trying to BS me on how narrow this is. If the language is indeed as tight as my sources are telling me, this is very big news.

All along in this battle, there have been two things progressives working on this issue have been fighting hardest for: one was that we got a broad, deep, well-resourced, and serious investigation of the big financial fraud issues that have gone down in this country over the last decade; the other was that if there was a settlement, that the legal releases the banks got was drawn as narrowly as it could be drawn, as tight as a drum. That combination, in the view of New York Attorney General Eric Schneiderman and those of us fighting by his side, would create real potential of finally holding the Wall Street bankers who wrecked our economy and abused us all accountable for their actions, and for getting a serious amount of money for writing down underwater mortgages. While there are still legitimate questions in both areas, it is looking like we may be achieving both of these huge goals.

One other big question remains in all this: with a release this narrow, will the big banks actually settle? JP Morgan Chase CEO Jamie Dimon and unnamed bank lobbyists are already threatening to walk away, and are clearly really unhappy, so that isn't clear. If they walk away, though, progressives can certainly live very well knowing that they will be prosecuted aggressively by AGs like Schneiderman, Beau Biden of Delaware, Kamala Harris of California, and hopefully others, so it's a win-win for us. My view is: anything that makes Jamie Dimon and big-bank lobbyists unhappy is good for the rest of us.

It is too early to declare victory, because we still don't know all the details and the bankers have yet to be brought to justice. Progressives still have to remain vigilant. But it increasingly is looking like we may finally be in a position to start winning some big victories against the big banks. And with the developments of this week and the appointment of Richard Cordray at the CFPB, it also increasingly looks like Barack Obama is going to have some real credibility to run against Wall Street.

 

Follow Mike Lux on Twitter: www.twitter.com/ProgressiveLux

Comments

[Renee KnafelBullock]

02:50 AM on 02/01/2012

http://www.facebook.com/l.php?u=http%3A%2F%2Falaskabrat.newsvine.com%2F_news%2F2012%2F02%2F01%2F10284306-alaskan-robostamp-victim-asks-judge-to-hear-all-facts-before-deciding-fate-of-eviction-filed&h=PAQEaxaPiAQHcncbpGmKmfMH9zRfeZQ-J2HIQ0Zlz_1g_EA

hello peoples lawyer, here is my story here in alaska, been dealing with this since 2008 In court today, as if you read my article its a mess, m so tired of it too.

[Peoples Lawyer]

08:30 AM on 01/30/2012

"Robo-signing" is a misnomer, which we have been tricked into using because it is a short term for "forgery, perjury and creation of fraudulent documents to make it appear as if the claimant has standing to foreclose on the home." It is too light of a term. The reason the claimants started "robo-signing" was the failure of the Mortgage Electronic Registration System (MERS) standing claims to hold up to examination in court. The foreclosure claimants then began to manufacture false documents to make it appear that the mortgage notes and the security interests (mortgages or deeds of trust) had actually been transferred to true owner of the indebtedness, which I have yet to see ever occurred. The trust should own the note and the security interest in order for the trust to foreclose through the servicer or trustee, but that is still a problem. I have never seen an effective and timely transfer of the note and security interest to the real estate mortgage investment conduit (REMIC trust.) One of my colleagues and I posit that the REMIC trusts may very well be unfunded or "empty." That does not even address the issue that the beneficial interests owned by the pension funds are, by the nature of the interests which failed to be conveyed, are UNSECURED.

[Peoples Lawyer]

08:28 AM on 01/30/2012

The failure of the MERS-scheme and similar deliberate concealment of the ownership of promissory notes and the associated security interests (mortgages or deeds of trust, depending on state law) is the cause of robo-signing fraud and the fraud continues to this day. As of July, 2011, MERS has instructed its users (members) to assign all mortgages (or deeds of trust) away from MERS prior to the commencement of foreclosures. This obviously calls for continued robo-signing fraud because the mortgages (or deeds of trust) are being retroactively "assigned."
MERS is merely the nominee of the illusory real party in interest anyway and can only assign its nominee interest. For a basic understanding of the MERS concealment scheme, I offer my article of April, 2011 in the Wisconsin lawyer, which is also available on WESTLAW.
http://www.wisbar.org/AM/Template.cfm?Section=Wisconsin_Lawyer&template=/CM/ContentDisplay.cfm&contentid=101560
The settlement as described is an injustice to homeowners who were fraudulently foreclosed if it takes away the homeowners' rights to individual legal actions to recover their real damages, not a mere $1500.00-$1800.00 for losing their home to the greatest financial fraud ever perpetrated.

[bave]

10:51 AM on 01/29/2012

If it actually says that, then the banks will simply reject it. No one, and I mean no one, would ever write a check of this size for something of so little value. It is easier for the banks to simply keep it in the courts, wait for an administration change in 12 months and be done with it then.

[General Washington]

05:06 PM on 01/27/2012

I certainly hope "vast majority" proves to be as promising as desired.

[addisonsteele]

04:33 PM on 01/27/2012

Any banker who relied on robosigned documents should be prosecuted. Any lawyer who filed a foreclosure action based on robosigned documents should be disbarred.

[Peoples Lawyer]

08:22 AM on 01/30/2012

For a basic explanation of the robo-signing fraud scheme via Mortgage Electronic Registration Systems, Inc. (MERS) I offer a basic article published in the April, 2011 edition of the Wisconsin Lawyer, which is the trade publication of the State Bar of Wisconsin. My comment at the end of this article will explain why addisonsteele is completely correct, provided that there is enough space for the comment to be published. This is not a topic which fits easily into a sound bite, but neither is as complicated as it was intended to appear to confuse the homeowners, the courts and the regulators.
http://www.wisbar.org/AM/Template.cfm?Section=Wisconsin_Lawyer&template=/CM/ContentDisplay.cfm&contentid=101560

[Peoples Lawyer]

08:32 AM on 01/30/2012

It is true that foreclosing based upon fraudulently created documents is criminal (and civil) racketeering and that any lawyer using fraudulently created documents to take a home has engaged in conduct prejudicial to the administration of justice, an offense for which disbarment is an available sanction. This has been done in over a million cases, according to available estimates.

[kamachanda]

02:29 PM on 01/27/2012

Jail time, Jail time, Jail time.

[Joseph Segal]

12:04 PM on 01/27/2012

Mike what leverage does the Obama Administration have with Fannie and Freddie? Why can't they direct them to write down peoples principle loans to current day market values?

[bave]

10:53 AM on 01/29/2012

Because they are securitized for one. FNM and FRE are largely pass throughs which are also effectively insuring the paper, but they don't hold it. It has long since been sold to private investors in MBS. Thus, FNM or FRE can't write it down because they don't have it, they don't control it, and lastly, they don't have the money to do anything resembling it.

Nevermind the fact that it would be hilarious if current administration tried, people would lose their minds. The 90% who pay their bills bailing out the 10% who aren't?