Stephen Lendman, Contributing Writer
What major media scoundrels call relief is, in fact, business as usual coverup and fraud, as Ellen Brown‘s important writing explained.
Obama pushed hard to get state attorneys general to settle for a fraction of stolen wealth, but it’s worse than that. More on the announced deal below.
At issue is securitized mortgage-backed securities fraud compounded by “robo-signing.” it involves “employees signing names not their own, under titles they did not really have, attesting to the veracity of documents they had not really reviewed.”
It wasn’t occasional. It’s been systemic grand theft since the 1990s. As a result, settling with crooks lets Wall Street shysters “off the hook for crimes that would land the rest of us in jail — fraud, forgery, securities violations and tax evasion.”
Forty nine of the 50 States AGs agreed to let five major banks off the hook — JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, and Ally Financial (formerly GMAC). Oklahoma opted out, not from altruism. AG Scott Pruitt wants no banker penalties. Stealing is OK with him.
In exchange for robo-signing fraud, illegal fees, failure to honor previous settlements, and other servicer abuses, rogue bankers settled for $25 billion. It amounts to pennies on the dollar at most.
Homeowners may sue on their own. States get a fixed amount for legal aid services. All securitization claims, tax and insurance fraud ones, and others may still be investigated and prosecuted by individual AGs and the Residential Mortgage-Backed Securities Working Group (RMBS).
Set up by Obama’s Financial Fraud Task Force, New York AG Eric Schneiderman is one of five co-chairs. Delaware, Missouri, Nevada and Arizona filed lawsuits. California AG Kamala Harris retained the right of state to sue under the state’s False Claims Act. Massachusetts also has a foreclosure fraud suit pending.
Funds are apportioned as follows:
- $17 billion for troubled borrowers in the form of principal reduction credits;
- $3 billion toward underwater borrowers’ refinancing; and
- $5 billion for cash payments to states to use for legal aid services, foreclosure mitigation programs, and fraud investigations;
In addition, Washington gets a small amount. Around 750,000 wrongfully foreclosed borrowers get checks from $1,800 – $2,000. It’s pennies on the value of home equity stolen. On average, borrowers are underwater by $50,000 each. Collectively, their negative equity approximates $700 billion.
However, millions of underwater homeowners aren’t helped, and statute of limitations absolution applies to amounts too large to ignore. Filings more than five years old are excluded, so defrauded homeowners beyond this timeline remain cheated out of luck.
It shouldn’t surprise. The deals that bankers agree to helps them, not victims. On February 9, Yves Smith’s Naked Capitalism article headlined, “The Top Twelve Reasons Why You Should Hate the Mortgage Settlement,” saying:
Settlement terms haven’t been released, but leaked details assure few troubled borrowers will be helped compared to much greater numbers left out.
State AG suits remain unresolved and won’t likely yield borrower-friendly results. The Nevada/Arizona suits were “folded into” settlement terms, effectively ending them.
(1) The maximum payout per borrower is $2,000. Its peanuts compared to amounts lost. It represents about 1% of loan balances. It’s “less that the price of the title insurance that banks failed to get when they transferred the loans to the trust.”
It’s also a fraction of legal expenses for challenged foreclosures. Bankers made out like bandits in terms of benefits and avoiding prison time. Borrowers are stuck with a deal made in hell.
(2) The $25/26 billion “is actually $5 billion of bank money and the rest is your money.” Write-downs will be almost entirely from securitized loans. In other words, investors will eat them, not Wall Street crooks.
(3) $5 billion apportioned among five banks is too inconsequential to matter.
(4) $20 billion “actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheet at the expense of” cheated borrowers.
(5) Enforcement is a “joke.” In large measure, it lets banks self-supervise.
(6) Past servicer consent decrees show they “all fail to comply….(T)hey cheat in all sorts of ways to (avoid obligations and) reduce their losses.”
(7) The Nevada/Arizona “cave-in” greatly helps Bank of America. It’s “by far the worst offender in the chain of title disaster….”
(8) If a “serious” deal was planned, the announced result wouldn’t have happened and high-level crooks wouldn’t get off unscathed.
(9) Many systemic abuses were ignored, “such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges.”
(10) The deal conceals “much deeper chain of title problem(s).”
(12) Housing market problems will keep festering. Underwater borrower suffering will continue. Mortgage-backed securities investors will “will to hung out to dry.” Unresolved problems put the residential mortgage market on “long term, perhaps permanent, government life support.”
The deal’s another example of who always wins and loses. It also proves Washington’s bipartisan criminal class hands bankers whatever they wish at the expense of ordinary people losing out entirely.
A Final Comment
Greece represents the epicenter of banker pillage. Multiple austerity rounds imposed mass unemployment, poverty, homelessness, hunger, and unprecedented human misery in a modern-day state. They also provoked mass street rage heading toward exploding in response to what people no longer will tolerate.
Homeowners can’t pay new property taxes. Suicides are Europe’s highest. Children faint in school from hunger. Hospital admissions rose 25%. Budgets serving them fell 40%. As a result, shortages of everything compromise care people can’t afford to pay for anyway.
HIV rates rose 50%. Other illnesses are rising. A humanitarian catastrophe’s unfolding. Nonetheless, ECB/IMF/EU troika pressure demands more in return for another 130 billion euro bailout to pay bankers, not use productively for growth.
The more Greece borrows, the more debt entrapped it becomes. Bankers occupy Greece. They demand their pound of flesh. They’re strip-mining the nation’s crown jewels and force-feeding austerity on people faced with more than they can bear.
Despite a deepening Greek tragedy, The New York Times hailed the latest deal instead of condemning it. It remains for Greece’s parliament to act. Despite strikes and mass protests, expect passage to be rubber stamp.
Besides previous harsh rounds, another 22% wage cut is coming on all salaried workers. Pensions and jobs are also targeted, around 150,000 public ones by 2015. In addition, permanent state enterprise positions will be abolished.
Greece already is bankrupt. Now it’s racing toward collapse. Social crisis conditions threaten to explode. It’s just a matter of time.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.