Yesterday's settlement with Wall Street
Michael
-----Original Message-----
From: Becky Bond, CREDO Action <a...@credoaction.com>
To: michael atkins <playe...@cs.com>
Sent: Fri, Feb 10, 2012 7:36 am
Subject: Yesterday's settlement with Wall Street
A bad dealDear
Michael,Wall Street banks fraudulently and illegally foreclose on your
house. You get $2,000. The bank gets let off the hook. We'dcall that a
bad deal.And yet yesterday, at the urging of the White House, federal
regulators along with 49 state attorneys general announced asettlement
deal for mortgage servicer abuse that does essentially that. It lets
banks off the hook for widespread foreclosurefraud.Press releases have
trumpeted a $26 billion deal which may sound like a lot, but it's a
paltry sum when you break down thenumbers.With an average mortgage of
$180,000, and loan instruments executed illegally, a family that lost
their home will get a checkfor just over 1% of the value of the
mortgage.1 That is not a victory. The amount of money this deal makes
availableto help homeowners is an order of magnitude too small and
incommensurate with the harm done by the banks.The estimated $10-$20
billion in the deal for principal reduction would reduce only about 2%
of the $700 billion in equitydestroyed during the financial crisis. And
the banks themselves will only pay $5 billion out of their own pocket.
By farthe lion's share of the cost will be borne by investors and
taxpayers, who had no part in the robo-signing scandal. 2No doubt the
deal is far better than the deal that was offered months ago. And this
most certainly is a result of activismfrom members of CREDO and many of
our allies in the progressive movement who worked with progressive
attorneys general likeNew York's Eric Schneiderman, California's Kamala
Harris, Delaware's Beau Biden, Massachusetts' Martha Coakley and
Nevada'sCatherine Cortez Masto to fight a bad deal.But the final deal,
while better, still can't be characterized as a good deal or even as a
good first step towards real accountabilityfor Wall Street banks.The
reported $26 billion settlement will not come close to inflicting any
real pain on the banks all of which have alreadyreserved the full
amounts required from them under the deal. As Robert Reich said, the
"$26 billion settlement with banksover mortgage fraud is far short of
what they should pay and distressed home owners deserve."3One in five
Americans with mortgages owe the banks more than their homes are worth,
and these home owners are underwaterby an average of $50,000 each. This
is a collective negative equity of nearly $700 billion.4Consider the
$700 billion bailout of Wall Street paid for by U.S. taxpayers5 and the
more than $1.2 trillion inloans6 provided by the Federal Reserve to
Wall Street banks. Or another way to put the deal in perspective isto
compare it to the tobacco industry settlement in 1998 — the
largest previous multi-state agreement. That deal wasworth $350 billion
in today's dollars — more than ten times the size of the mortgage
deal.7And that's not even all that's wrong with this deal. The federal
government's track record for enforcing settlement termswith Wall
Street banks is abysmal. Furthermore, even if the banks follow the
terms of the deal, it's quite possible thanwhen all is said and done,
not only will the banks have suffered no pain, they may actually come
out having profited fromtheir illegal schemes to rip off homeowners.
According to the Consumer Financial Protection Bureau, the largest
mortgagebanks saved $20 billion by taking illegal shortcuts — an amount
far greater than the $5 billion out of pocket theywill be required to
pay in this deal.8All of which adds up to a scenario in which this
settlement does literally nothing to deter the banks from engaging in
thesame fraudulent behavior in the future.Senator Dick Durbin famously
said the Wall Street banks own the politicians in Washington, DC.
Today, this could not be moreclearly true as we closely examine the
deal that the Obama administration cut with Wall Street and pressured
state attorneysgeneral to sign.There has yet to be a full investigation
of the robo-signing scandal despite what Reuters called "copious
evidence" of "widespreadforgery, perjury, obstruction of justice, and
illegal foreclosures...." 9By establishing settlement terms before
there has been any meaningful investigation, the deal whitewashes the
widespreadlawlessness of the banks and virtually ensures that no
bankers will be held criminally responsible for their part in
therobo-signing scandal and foreclosure fraud.Though the exact terms of
the settlement have not been disclosed, we understand that it will not
cut off other importantavenues to hold the banks accountable. New York
Attorney General Eric Schneiderman is co-chairing a federal task force
thatif fully resourced and left to operate unhindered by the White
House could achieve hundreds of billions in reduced principalfor
underwater homeowners and criminal indictments for bankers who broke
the law and helped drive our economy off a cliff.And other state
attorneys general can continue investigating Wall Street's role in
causing the housing crisis to ensure thatthe banks that caused the
crisis are held accountable for their wrongdoing.This is the biggest
case of fraud in our history. Homeowners deserve justice for crimes
committed against them by Wall Streetbanks that in many cases literally
stole their homes from underneath them. Unfortunately, yesterday's
settlement doesn'teven provide anything close to a down payment on
justice.As the election season heats up, we must be insistent about
real accountability for Wall Street crooks. Pressure from activistslike
us will be even more important in the days to come if we are to achieve
any real measure of accountability for WallStreet bankers who profited
from their crimes and left the 99% to pay to the price for their
reckless disregard.Becky Bond, Political Director
CREDO Action from Working Assets
1. "The Top Twelve Reasons WhyYou Should Hate the Mortgage
Settlement," Yves Smith, Naked Capitalism, 02-09-12
2. "The Servicing Settlement:Banks 1, Public 0," Adam Levitin,
Credit Slips, 02-09-12
3. Twitter, 02-09-12
4. "Mortgage Plan Gives HomeownersBulk of the Benefits,"
Nelson D. Schwatz and Shaila Dewan, New York Times, 02-09-12
5. "Wall Street AristocracyGot $1.2 Trillion in Secret Loans,"
Bradley Keoun and Phil Kuntz, Bloomberg, 08-22-11
6. "The Wall Street BailoutPlan Explained ," David Stout, New
York Times, 09-20-08
7. "FAQ: The foreclosure settlement," Sarah Halzack and Sarah
Kliff, WashingtonPost.com, 02-09-12
8. "Big Banks Save BillionsAs Homeowners Suffer, Internal Federal
Report By CFPB Finds," Huffington Post, 03-28-11.
9. "U.S. AG Eric Holder, DoJHead Lanny Breuer Linked To Banks
Accused Of Foreclosure Fraud ," Reuters, 01-19-12. Share on Facebook
Post to your wall Tweet this
Post to Twitter
© 2012 CREDO. All rights reserved.
To remove yourself (michael atkins) from this list, please visit our
subscription management page at:
http://act.credoaction.com/s?i=34829-4757832-AMFQY4x To change your
email address or update your contact info, please visit:
http://act.credoaction.com/subscrip/coa.html?id=34829-4757832-AMFQY4x