By Robert Borosage, cross-posted from Campaign for America's Future
The bank settlement of $25 billion over three years from five major banks for robo-signing forgeries is being hailed in Washington and scoured by leading bank critics.
It is hard not to be suspicious of any settlement that the banks
would agree to. I’m reminded of Groucho Marx who said upon being
invited to join a country club: “I wouldn’t want to belong to any club
that would have me.”
But the deal should be seen for what it is – a relatively small ante by the banks handed out before the real cards are seen.
What’s clear is that the banks trampled the law in their wilding
while blowing up the housing bubble. They abused homeowners, committed
routine forgery and perjury before the courts, and defrauded investors.
When the bubble burst and the housing market collapsed, homeowners were
left about $700 billion underwater (owing that much more on their
mortgages than their houses are worth).
The banks are looking for a deal that will relieve them of untold
criminal and civil liabilities. Untold is the right word because,
outrageously, there has been no real investigation into the scope of
their crimes. The state attorneys general simply don’t have the
resources. The federal government does, but once the administration
decided to continue Bush’s policies of bailing out the banks without
reorganizing them, it has been committed to keeping insolvent banks
afloat, not holding them accountable.
So the administration and some state attorneys general started
pushing a deal that would relieve the banks of immunity. Some
courageous attorneys general – Eric Schneiderman of New York, Beau
Biden of Delaware, Catherine Cortez-Masto of Nevada, Martha Coakley of
Massachusetts, Kamala Harris of California and others – held out.
Schneiderman led the effort to limit the scope of immunity offered the
banks, expand the settlement, and force the administration to launch a
real investigation at the federal level.
So this deal results. It gets a relatively small sum from the banks
in exchange for circumscribed immunity on their flagrantly illegal
robo-signing – or forgery – of mortgage documents. The money will
provide homeowners with the possibility of real legal assistance and
small amounts of relief. No private rights of action have been waived.
The suit brought by Schneiderman against Mortgage Electronic
Registration Systems, or MERS – the bank creation that simply trampled
hundreds of years of property laws – continues, and other state AGs
should follow suit. Schneiderman now co-chairs a federal task force
charged with doing a real investigation that could result in a serious
settlement. That's not part of the settlement, but it is the most
important part of the deal.
The deal has been cut before the investigation so it is suspect on
its face, but limited in its scope. Whether it will be enforced
adequately remains to be seen. How homeowners benefit will differ from
state to state.
But the real question remains whether the federal investigation will
finally turn over all the cards so we know just how bad a hand the banks
are holding. Only then is there a possibility for real accountability –
and real relief for homeowners.
So this settlement must be the beginning, not the end. We have to
sustain pressure on the administration for an aggressive investigation.
State criminal and civil suits, individual and investor relief have to
continue. We are a far remove from achieving the justice and
accountability that is due.
Thursday, February 9, 2012
The Bank Deal: Ante Before The Cards Are Played
Tags
Banks
,
foreclosures
,
law and justice
,
Obama
,
Progressive
,
Wall Street
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