This week a $25 billion settlement was announced in which big banks pay up for a portion of their bad deeds in the home foreclosure crisis. Everyone is trying to determine whether this is a good deal or a bad deal.
Here is how I score it. This deal represents small progress on a small problem. Now it's time to make big progress on the big problem.
Don't count on finding many good points in the deal itself, because there aren't a lot. In fact, the main win can be found in what's NOT in the deal.
A truly horrible deal would have let the banks write a small check and then seal the door on all further investigations and pursuits of accountability. This deal does NOT do that. Because this settlement limits legal immunity for banks, this deal does not automatically let the banks off the hook for all of their wrong-doing. Except for a few issues like robo-signing, state attorneys general can still fight for more compensation and relief for the banks' victims. Government officials can proceed with investigating and prosecuting banks for their role in crashing the economy and the housing market. In other words, the door is still open to solve the much bigger problems we face. Our fight for justice can, and will, continue.
That is small comfort, perhaps, but it was hard won. So we should honor the hard work of New York State Attorney General Eric Schneiderman, California Attorney General Kamala Harris and others, including many grassroots progressive organizations like New Bottom Line. They fought courageously to prevent a total sweetheart deal for the banks. This outcome is the result of determined activism, and without this heroic effort, the deal would have been drastically worse.
That said, there is a reason why many progressives and housing advocates are furious, and why many struggling homeowners are left wondering, "How does this help me?"
Millions of homeowners and families are still suffering under the tremendous weight of a debt blanket that is smothering the economy.
This $25 billion settlement helps only a fraction of those homeowners and addresses only a very limited set of fraudulent behaviors. A number of homeowners will get some cash payments, but the amounts are negligible compared to the pain and injustice they have experienced. The actual total cash paid out by the banks is only $5 billion dollars, to be split among the nation's largest banks -- hardly a stiff penalty considering that the six largest banks in the U.S. paid $144 billion in bonuses last year. And enforcement mechanisms remain murky.
We must not forget the more than 14 million homeowners (one in five) whose homes are underwater, beneath a crushing total $700 billion in negative equity. We must not forget the more than 4 million families who have lost their homes. We must not forget the millions of families who are in some form of foreclosure proceedings on this very day.
These are the Americans who have suffered and continue to suffer. They are worried today, like yesterday, whether they will still have a home to live in tomorrow. They are the ones who must choose every month whether to pay bills or to feed their children.
Here are three things that must happen next:
1) The U.S. Department of Justice and state attorneys general must investigate and prosecute banks more aggressively than ever, at a much larger scale than anything that has happened to date.
2) We must force banks to make massive principal reduction of hundreds of billions of dollars, to immediately relieve the 14 million homeowners in the country who have underwater mortgages.
3) We must change laws and regulations to prevent this kind of crisis and fraud from ever happening again.
Two weeks ago, I called for hundreds of billions in principal reduction for homeowners. This would free up Americans to start new businesses, spend money on worthwhile products and services, and invest in their children's futures. We still need to address the $700 billion in negative equity, which in turn is only part of the nearly seven trillion dollars in total lost equity created by the banks' irresponsible, and in some cases, illegal practices.
We need a solution at the scale of the problem, so that families can get back on their feet, the economy can get working, and people can reach for their American dreams again instead of watching them drown.
That is why I say: $25 billion down, $675 billion to go.
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Dennis M. Kelleher: Robo-Signing Bank Settlement Is a Criminal Sell Out
The people really getting screwed are the ones saved up for a down payment, bought a house they could afford and made the payments on it. How is it fair that their earning have to go for other people's excesses and bad decision? Is it unreasonable to expect that when one takes out a loan one expects to pay the entire amount back?
and I hear: "Other than that, Mrs. Lincoln, the play was..."
To quote from another HuffPo article, The Top 12 Reasons Why You Should Hate the Mortgage Settlement, this is #1:
> snip <
1. We've now set a price for forgeries and fabricating documents. It's $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It's a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.
> snip <
So, lawyers, except for the death of law, your deal is...
FAIL.
Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
“Insanity is doing the same thing over and over and expecting a different result."
~ Albert Einstein
The fact that it only goes to the robosigning and not close the door on the wrongdoings and other violations of civil and consumer rights. There is a vast area for scamming people out of their homes, properties and belongings. Some are not even caught in divorce and other cases, due to no representation or if so, poor and incompetent lawyering. Whatever the situation, there are no real winners but the future generations who can take away much information out of this and be very careful when purchasing and reading documents during mortgage pre-post applications. The key is to read and try to understand everything from bold to fine inking.. be careful of the individual who holds onto the paperwork and tries to conceal aspects of the provisions. Get busy with protecting yourself, or spend years trying to right the wrongs if it can be proven. Good article..Van Jones!!!
Isn't it rather that the vast majority of people are simply confronting the consequences of a series of bad choices: buying a home one couldn't afford - saving nothing for a rainy day - taking out a mortgage with unfavorable terms.
The article actually insults the people it purports to champion; arguing, in essence that people weren't smart enough to read any documents they signed, negotiate for more favorable terms, shop around for mortgages, etc. Sentient people make choices, and in retrospect some of those choices turn out to be unfavorable. A bad result is not necessarily the fault of some bad actor.
On both sides of the aisle, there is a right and a wrong way to do something. The banks seem inclined to choose the wrong way.
Goldman Sachs had also, maintained that have had no exposure to AIG and basically lied to regulator, just so they could received addition $3 billion backdoor TARP taxpayer bail-out money.
Seize the assets.
Jail the criminals.
Change the system.
Jail all senior executives and public servants involved with repealing Glass Steagall, turning the GSE's into zombies, and allowing Wall Street firms to become banks, handing out (and receiving) trillions in low rate loans under the table from the Fed.
We forgot that by the time GWB entered the Oval office every business regulation was rescinded . GWB immediately did the Bush family thing and headed for the most government guaranteed money he could enhance the pilfering rewards of . He setup F&F so the payout , in case of default , would be enormous .
We forgot that all mortgage loans are guaranteed by government or other mortgage loan insurers . When the mortgages were bought up the new owners became the lenders that would collect from the insurers in case of default .
We forgot that GWB had Congress dump 1/2 Trillion Dollars in to F&F before the pilfering started . and at the same time he directed American tax payer money in to Pat Robinson's pockets .
We forgot that there were TWO huge market crashes during the GWB era . And after the second crash the corporate media started yelling about low income borrowers . Which was diversion lie . Low income borrowers can not short sell stock . Which what caused the crash .
We forgot that after Bush , Newt , Romney , and their cohorts had ran F&F very deeply in to debt , GWB then had Congress take over F&F making the American payer totally responsible for the F&F loses .
We forgot that this all legal because the Glass Steagall bank regulation had been rescinded . And we still cannot remember why Glass Steagall was enacted . TO prevent what GWB , Newt , Romney , and cohorts did .
This $26 Billion is not meant to be a fix . It is a bank agreed upon punishment for doing what GWB suggested .
http://www.youtube.com/watch?v=kNqQx7sjoS8
Never mind that housing values are not only directly tied to economic activity, but the rampant fraud used by institutions that didn't own the notes on the houses they were foreclosing on caused much (if not all) of the decline in home values.
Which is what this (not finalized, and therefore likely to get worse) agreement is supposedly about, and why the fraud's effects need to be followed up with more punishment for these criminal institutions...
These settlements will not be paid for by people who have already paid their mortgages (such as myself), or people who are still paying on their mortgages. They will be paid for by pension funds and other institutional investors. Such as unions (hence why public and private pensions are under attack).
You might also want to change your nom de guerre, because you are certainly overestimating at least one of your qualities...
Just building homes provides jobs for so many different trades and professions - architects, developers, builders, carpenters, plumbers, roofers, electricians.
.....developments need roads, power , utilities, schools, hospitals, police, fire departments, shopping, restaurants, etc..............and all of these provide jobs....
And for every new home, there are older homes sold as well , stabilizing neighborhoods and all of this providing tax revenues from the city level up to the state and federal.
Rewarding mega - banks and financial institutions for misbehavior and ignoring the American Middle Class taxpayers is malfeasance on the worst level.
Bankruptcy is what this country uses as remedy for TBTF and a moritorium on foreclosures by law.
Instead, the American taxpayer was told by the corporate mass-media to be SUCKERS for bailouts.