In Orwell's dystopic 1984 Winston Smith - working at the Ministry of Truth - finds it easy to dispose of the past: simply take an old news story that doesn't jibe with Big Brother's current agenda and simply re-write it (disposing of the original in the conveniently placed vaporizing slot).
These days it's not as easy to bury the past but Wall Street has certainly made a valiant effort tacking on "legacy" whenever referencing a settlement stemming from the unpleasantness of 2008's global meltdown.
Goldman Sachs, for instance, coughing up $5.1 billion dollars as restitution for selling the toxic financial crap that helped torch the housing market, trumpeted in self-satisfied fashion, that "we are pleased to put these legacy matters behind us."
Citibank, forking over $425 million to resolve cases involving complicity in the scam/scandalous interest rate rigging affair, claimed the settlement represented "a significant step for Citi in resolving its legacy benchmark investigations."
JP Morgan Chase, Bank of America and Morgan Stanley have already paid out a total of $40 billion to put to bed similar "legacy" investigations and that's in addition to some $25 billion dollars paid to Federal and State regulators, in 2012, by Big-Bank servicers for all sorts of varied and sundry foreclosure abuses.
While you can try and run from the past you can't hide from its consequences: an economy that stalls and sputters; a middle-class in tatters and a housing market, which for many, lacks any affordable options. That's also part and parcel of Wall Street's legacy.
According to industry analyst, CoreLogic, 8% of a current total of 50 million mortgaged homes are still underwater financially. They continue to be fair game for an industry claiming to have left all that toxic badness in the legacy hopper but continues to seek new revenue streams from the damage they helped create. For instance, so-called "NPL's" - a charmless acronym for non-performing loans - provides renewed opportunities for investors to make big bucks via the auctioning off of said mortgages by housing giants, Fannie, Freddie and HUD.
Like so-called "Distressed Assets," behind every NPL is a real human with real problems trying to survive and according to critics like Elizabeth Warren, once houses are owned by third party investors with no real incentive to make affordable financial arrangements, homeowners can be forced to walk the foreclosure plank.
Shoving a toxic genie back in a bottle marked "legacy" may be even more difficult for Goldman Sachs, which claims in their settlement press release to have moved on, pointing out that, "since the financial crisis we have taken significant steps to strengthen our culture...."
More than four years ago I wrote a blogpost for Huffpo, ahead of the 2012 election, that discussed a little known Goldman subsidiary, "MTGLQ," which held residential loans and actually foreclosed on homeowners (my piece referenced the investigation by McClatchy News Syndicate correspondent, Greg Gordon, for a 2009 series on Goldman Sachs).
MTGLQ has avoided being consigned to Goldman's legacy dustbin and has re-appeared as a financial piranha, joining the feeding frenzy for NPL's, buying several pools in the last few months from Fannie and Freddie; "snapping" them up, according to Housing Wire.
How these NPL homeowners will be treated is anyone's guess.
I put the question to Goldman Sachs spokesperson, Michael Duvally, who declined to comment
Advocates for affordable housing have been pushing to make more of the NPL's available for acquisition by non-profit community organizations and socially-conscious investment funds; places where designing payment plans that are realistic and affordable for homeowners trumps making big bucks. Leading the charge is Elizabeth Warren, together with some Congressional colleagues, and no surprise, she's met major push back from Republicans in Congress; namely House Financial Services Committee chairman, Jeb Hensarling (R-Texas) and his Senate counterpart, Banking Committee head, Richard Shelby (R-Alabama). They've responded to her homeowner-friendly initiative by issuing a statement calling for regulators to reject any notion that housing activists be given a fair chance to grab a piece of the NPL pie.
America's Foreclosure Crisis Isn't Over, was the title of a January 26th CBS Money Watch story that cited a worrisome statistic: 4.3 million felt the sharp sting of foreclosure in the last quarter 2015.
Now, If you think that all the foreclosure fraud that came to light in the years following the meltdown is a thing of the past, catch a bit of what journalist David Dayen has been writing about. It's pretty shocking; clearly the bad old days are still very much with us.
Florida - once the epicenter of the foreclosure crisis - documented in the compelling 2015 feature film, 99 Homes, is probably the worst place to be if you're a homeowner in trouble. Governor Rick Scott has never warmed up to the idea that homeowners - like the Mega-Banks - should be offered any sort of bailout but he's taken this to new mean-spirited heights. According to the Orlando Sentinel, his state has turned down an opportunity to apply for $250 million in Federal funding earmarked to help struggling homeowners.
Wall Street's legacy is one that continues to negatively impact homeowners, neighborhoods and the general well-being of the nation. Buying into financial services newspeak about "legacies" to avoid dealing with critical problems is a quick ticket back to the pre-2008 future.