Obama Administration’s Price Tag for Bank Lying, Predation, and (Probably) Securitization Fail: $8 Billion
Back when the foreclosure fraud settlement was purportedly only going to cover robo-signing abuses, the price tag was going to be $17 billion.
Now that the Obama Administration is desperately trying to craft a settlement deal to include origination problems, the price tag has grown to $25 billion.
Under the proposed terms of the settlement — which could total $25 billion — banks would get broad legal immunity from state lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.
The deal could provide some relief to the battered U.S. housing market and clear up some uncertainty about banks’ legal exposure that has been a drag on their shares.
Banks have been holding out on a multi-billion-dollar settlement because they wanted broader legal immunity than state attorneys general were prepared to offer.
Originally, the states were only considering immunity for shortcuts taken during mortgage servicing and foreclosures, including the so-called “robo-signing” of documents to evict people behind on their mortgages.
In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.
That means for all the additional things the banks would get immunity for–at the very least, the liars loans and the predatory lending, all the things they’re getting hammered for in reps and warrants suits, though the language might well immunize securitization failures–banks would pay just an additional $8 billion.
That, in spite of the fact that FHFA filed lawsuits against the banks that might be worth $40 billion, with $11.5 billion from Bank of America alone.
So basically Obama wants to fund HAMP 2.0 by letting banks out of at least 80% of what they stand to lose in court.
For OSW:
First, please TRY to imagine the power shift toward good if we could put our money into about 3, or 10?, 20? HONEST banks around the country. We’d have to find bank leaders who would be above reproach whom we could trust to diligently oversee operations to make sure the banks run honestly, and stay honest, with no small print tricks and hidden traps and fees.
Imagine the POWER of the HONEST credit cards issued by these banks, perhaps with an entirely new and HONEST transaction network in place. Imagine the econ and market data we could honestly collect and use (with opt-in permissions from banking and credit card customers) to discover which products and services are faulty, to help steer customers away from rip-offs and cons and toward the good honest competent operators in our economy.
Nationalize everything that is too big to fail!
by what legal reasoning does the federal govt have the power to immunize banks from states’ lawsuits?
First, we looked forward and not back.
Then we got the bill changing the law of oaths, the one that no one sponsored, that was never in committee, that no one moved out of committee, that no one voted on, and that landed in ready-to-sign form on the President’s desk in the middle of the night, that was topped only after near rioting in the blogosphere. Never covered in the tradmed.
And now this.
Not surprising, but still disgusting.
@scribe:
and of corse we have to add to the list
immunizing the telecommunications corps from legal retribution for breaking the law by allowing the govt to tap into phone circuits and spy on americans
@scribe:
what was this “changing the law of oaths” business about? i haven’t heard of that – at least by that name.
I am no major financier, but reading through this on Bloomberg yesterday made my stomach turn. http://www.bloomberg.com/news/2011-10-18/bofa-said-to-split-regulators-over-moving-merrill-derivatives-to-bank-unit There is a lot of other reading to go with it all about derivatives, but the upshot is that $25 billion is a drop in the bucket.
It is obvious that our government no longer controls anything. The banks will do whatever they please…
@orionATL: Right! I’m still trying to figure out just how Turbo-Tax Timmeh & Co. think this is going to fly when states like New York and California have already bowed out.
@orionATL: It doesn’t and they wouldn’t.
As it is, FL, MI, and AZ are the only huge foreclosure states still in this. CA and NV are out, so the banks won’t be immunized in those states (And obviously Masto has her new suit on precisely these issues).
I thikn they figure they’ve got enough states to look like a bunch (though not in terms of foreclosure exposure) to settle the FHFA suits and then call it immunity.
@Sojourner: Yup. Just did a post on it. I think Ben Bernanke has decided to rob my mom.
@orionATL: There was a statute proposed which would have changed the law regarding things like documents signed under oath, such that all those forged documents the mortgage companies and banks were providing to courts would not have been susceptible to challenge (as being forgeries) but rather the courts would have to have accepted them.
It made it all the way to Obama’s desk until enough people went ballistic that he decided it would not be wise to sign it.
@emptywheel: #9
Add NY and DE to that list of non-players as well, with significant bank / corporate presence. The deal would be a sweeping expansion of federal power [something normally avoided by the MOTUs], much like the next step of zoning regulation by federal fiat. Really, this is the kind of thing that the PRC already does, and they have cities where no one lives [aol runs a photo essay on the topic every so often], and the Soviets did in their Five Year Plans. What’s different this time is that the MOTUs are profiting from this short-term and they no longer think of anything else. Promises, of course that they won’t keep.
“Legal errors” is double-speak for felonies.
@Dan: #13
That’s the MOTU version, not the proletariat version.
@scribe:
thanks, scribe
Romney’s plan for all foreclosures is to ‘speed them up’ because, after all, he is a business man and he knows how to grow jobs. He is taking his corporate-raider experience to the housing problem. The fundamental difference in the housing situation though, is that SYSTEMIC BANK FRAUD caused bloated-false-fraudulent-illusory-fake-synthetic appreciation of property values to which people became trapped in loans they cannot do anything about. Can’t sell. Can’t modify. Can’t rely on their republican attorney general to prosecute(hello Pam Blondi). Can’t trust the bank to do anything. This is compounded by the ‘Liar for hire(aka robosigning)’ scandal. So, here is a complex problem and the candidate with a 59 point plan for economic growth can’t grasp this. He ain’t stupid. He knows. Romney is really a banker.
https://www.facebook.com/pages/Republicans-Against-Bankster-Fraud/175083899243500
@orionATL: I think is beyond constitutional powers. From where AG’s can provide immunity to a “blank” amount of people for “blank” acts? Not even Congress can. Neither the executive branch. And, how are they going to stop other actions where private parties are accusing without intervention of AG’s?
could be a target for nullity. I’ve seen something like that before.
At Brooklyn foreclosure court last Thursday, youtube posted Friday and now seen 13,763 times:
http://www.youtube.com/watch?v=u3X89iViAlw
(see Naked Capitalism story here)
@Andrew: #16
One thing about Romney’s assertion is that it assumes that the title can be traced reliably. However, the Massachusetts Supreme Court just ruled against the homeowner that bought a foreclosed property, saying that the homeowner did NOT have title to the property, because the foreclosure process used [which apparently was run through MERS, and other things] lost track of the true title owners. So, even if Mittens gets this going on his terms, his own state’s court says without clear title the investors wouldn’t own the foreclosed properties and their money would go pffft. FDL has details in the News area.
@rugger9: Who are those MOTU we keep bantering about? Well, here’s a clue. In The Capitalist Network That Runs the World By Andy Coghlan and Debora MacKenzie, in New Scientist, 20 October 11, they start with a database on 43,000 Trans-National Corporations (TNC), which was then whittled down to a core of 1318 companies with interlocking ownerships, which were then whittled down to 147:
Now, if you’re interested in all 147, you can go to the source. I’ll just tantalize you a little with the first 25 on their list:
Fleet street is well represented at the top, but so also are banks from Germany, Switzerland, Japan, France, and, of course, the United States.
But wait. Look up top again. Did you notice that I said that the study began with information on 43,000 TNCs? Yes, our Brave New World is run by TNCs. The list is constructed on the basis of interconnectivity, but that’s probably going to correlate with Gross Corporate Product. And the GCP of each of these 25 companies is probably greater than the Gross National Product of half the countries in the World.
So how many MOTU are there? Even 147 is too big a number. Imagine, if you can, the dozen most influential MOTU from this list of corporations. First, they’re probably all men. Second, imagine what kind of power they must wield when there are so many other would-be MOTU clawing their ways up the corporate ladder. It would be interesting to see the list of members of the Board of Directors, as well as the CEOs, CFOs, and other power players just in these top 25 corporations. How could you even measure their relative degrees of power?
Bob in AZ