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:
- No release on any fair housing, fair lending, or civil rights claims.
- No release on any Federal Housing Finance Agency or Government-Sponsored Enterprise claims.
- No release on any Consumer Financial Protection Bureau claims (which would admittedly be modest, since the Bureau was only established in July 2011).
- No release on tax liability claims.
- No release on criminal liability claims.
- No release on SEC claims.
- No release on National Credit Union Association claims.
- No release on FDIC claims.
- No release on Federal Reserve claims.
- No release on the "vast majority" of origination claims.
- No release on the "vast majority" of securitization claims, including all claims of state pension funds.
- 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.