Mon Jan 23, 2012, 10:47 PM
tpsbmam (3,927 posts)
The Nation: Obama Is on the Brink of a Settlement With the Big Banks—and Progressives Are Furious
For months, a massive federal settlement with big Wall Street banks over their role in the mortgage crisis has been in the offing. The rumored details have always given progressives heartburn: civil immunity, no investigations, inadequate help for homeowners and a small penalty for the banks. Now, on the eve President Obama’s State of the Union address—in which he plans to further advance a populist message against big money and income inequality—the deal may be here, and it’s every bit as ugly as progressives feared.
The Associated Press reports that a proposed deal could be announced within weeks. Five banks—Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC)—would pay the federal government $25 billion. About $17 billion would be used to reduce the principal that some struggling homeowners owe, $5 billion more would be used for future federal and state programs and $3 billion would be used to help homeowners refinance at 5.25 percent. Civil immunity would be granted to the banks for any role in foreclosure fraud, and there would be no investigations.
There are several reasons why this is could be a terrible deal. For one, the dollar amount is inadequate in relation to both the tremendous loss of wealth via mortgage fraud and the hefty balance sheets of these massive companies. Furthermore, the banks might be allowed to use investor money instead of their own funds—this makes the penalty even lower. Beyond all that: it’s extremely hard to justify the absence of investigations and punishment for mortgage fraud that was so widespread and so damaging to people’s lives.
There are also many other, more serious problems besides a lack of punitive action. The small amount of money—and the federal government’s recent inability to truly help underwater mortgage holders, of which there are currently 11 million—means that the victims of mortgage fraud might not see enough relief. And perhaps most importantly, with no real punishment for widespread damaging fraud, what are the incentives on Wall Street not to engage in similarly destructive practices once again?
The rest is at The Nation.
Boy, this couple with the article that just came out about Holder & Breuer, and if this comes to pass, it stinks to high heaven!
U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.
The firm, Covington & Burling, is one of Washington's biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.
Reuters reported in December that under Holder and Breuer, the Justice Department hasn't brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.
While Holder and Breuer were partners at Covington, the firm's clients included the four largest U.S. banks - Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co - as well as at least one other bank that is among the 10 largest mortgage servicers.
As Robert Sheer wrote back in August:
They will get away with it, at least in this life. “They” are the Wall Street usurers, people of a sort condemned in Scripture, who have brought more misery to this nation than we have known since the Great Depression. “They” will not suffer for their crimes because they have a majority ownership position in our political system. That is the meaning of the banking plea bargain that the Obama administration is pressuring state attorneys general to negotiate with the titans of the financial world.
It is a sellout deal that, in return for a pittance of compensation by banks to ripped-off mortgage holders, would grant the banks blanket immunity from any prosecution. That is intended to short-circuit investigations by a score of aggressive state officials, inquiries that offer the public a last best hope to get to the bottom of the housing scandal that has cost US homeowners $6.6 trillion in home equity in the past five years and left 14.6 million Americans owing more than their homes are worth.
Yet the administration has rushed to the aid of the banks once again and is attempting to intimidate the few state attorneys general who have the gumption to protect the public interest they are sworn to serve. As Gretchen Morgenson of the New York Times reported:
“Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices.…
I'm sickened. Totally sickened at what the President is reportedly preparing to do. But he'll not do it without a fight -- I hope it's clamorous on the part of us 99%ers! Here's a statement from Richard Trumka released today in response to the reports that Obama is about to indemnify these fraudsters......
January 23, 2012
Statement by AFL-CIO President Richard L. Trumka on Possible Bank Mortgage and Foreclosure Fraud Settlement
8 replies, 1684 views
The Nation: Obama Is on the Brink of a Settlement With the Big Banks—and Progressives Are Furious (Original post)
Response to tpsbmam (Original post)
Mon Jan 23, 2012, 10:55 PM
JDPriestly (56,917 posts)
3. Letting the banks of easy could cost Obama the election.
That is how important it is to ordinary voters to hold the banks accountable for every cent they lost or stole.
A deal like this is reprehensible. Shockingly so. It's legitimizes the bankers' and mortgage companies' theft.
Response to Marrah_G (Reply #5)
Tue Jan 24, 2012, 01:50 AM
tpsbmam (3,927 posts)
6. You wouldn't expect the Justice Department to take on the banks? Ever heard of the Servings & Loan
crisis of the 1980s?
This is William Black talking about the 1980s Savings & Loan Crisis:
The Savings & Loan crisis was a tragedy in two parts. First part was not fraud, it was interest rate risk. But the second phase, which was vastly more expensive, was to defraud and the National Commission that looked into the causes of the crisis said that the typical large failure fraud was invariably present. And there were real regulators then. Our agency filed well over 10,000 criminal referrals that resulted in over 1,000 felony convictions and cases designated as nature. And even that understates the grade in which we went after the elite. Because we worked very closely with the FBI and the Justice Department, to prioritize cases—creating the top 100 list of the 100 worst institutions which translated into about 600 or 700 executives—and so the bulk of those thousand felony convictions were the worst fraud, the most elite frauds.
Here's the rest of the interview with William K. Black -- he was comparing the Savings & Loan crisis & criminal prosecutions to the reaction (or lack thereof) in this frankly must worse crisis. And here's a huge, 59-page long paper on the criminal prosecutions (including the massive investigations undertaken in the Justice Dept. and prosecutions coming out of Justice): After the Fall: The Criminal Law Enforcement Response to the S&L Crisis
Obama's Department of Justice shouldn't be busying themselves with busting state authorized medical cannabis dispensaries, they should fucking well be prosecuting the banksters, not protecting them!
Response to Marrah_G (Reply #5)
Tue Jan 24, 2012, 02:29 PM
tpsbmam (3,927 posts)
7. ....crickets.... Here's another glaring juxtaposition......
From the NY Times:
The desire to know precisely what happened during that give-a-mortgage-to-anyone-who-breathes, securitize-this frenzy has historical antecedents. In the Great Depression, the United States Senate hired another New York lawyer, Ferdinand Pecora, to write the report on its investigation of that collapse.
Mr. Pecora found more questions than answers, and insisted on more subpoenas, more forensic investigators and more brokers testifying under oath. Like a man reaching into a barrel of dead fish, he found a great stink. Not least, he discovered that National City (the lineal ancestor of the same misbehaving Citigroup) had sold flawed investments and that its president engaged in something close to tax evasion.
Seventy-eight years later, the Obama administration has Shaun Donovan, secretary of housing and urban development; the economic adviser Gene Sperling; and Attorney General Eric H. Holder Jr. dialing liberals, activists and bloggers, urging them to pressure the rebellious attorneys general to forgo emotionally satisfying inquiries and take the deal.
Still think Obama (or his administration) can't really be expected to take on the banks?
Gimme a break!