double-dip, eh.

well,

that means more opportunity to buy small, old houses with large lots in semi-urban, urban counties and stockpile them until “prosperity” returns, gas prices are $5/gallon, and infill home building reigns.

should i post a double-dip tip jar?

The phrase, “The settlement terms remain fluid,” has such great utility. It can hide how tight the deal made already is or distract attention from a politician’s inability to get one that his supporters could support.

Odds are, as with the public option, the deal’s been brokered. The issue is how to sell it so that politicians won’t get cold feet and change their minds.

The truth, of course, is that there ought to be no deal, no global settlement, not in the sense of taking the banksters off the hook and “relieving negative influences” on the great and glorious market.

We need investigations, prosecutions and where convictions are obtained, stern sentences. Send one Blankfein or Dimon to Sing Sing, to cohabit with Bubba in an ordinary cell for ten years, and you dissuade a hundred would be Blankfeins and Dimons from so savagely breaking the law. It’s a moving target; there will always be another Jeffrey Skilling who thinks he’s stronger, faster, smarter than the next prosecutor. Vigilance and a continued willingness to apply the law without fear or favor are essential, and so utterly lacking today under our constitutional lawyer president and his predecessor.

Normal legislative and regulatory fixes would save millions of householders and the communities that depend on them. Reintroduce cram down. Regulate deceptive lending and administrative practices; break the business model that depends on inducing usurious penalty fees and charges that banks now depend on for the profit streams Wall Street demands. Make settlements obligatory for certain troubled debtors, a circumstance that might call for reimbursing responsible lenders (if you can find any). Revise absurd accounting practices that allow debt to be treated as non-existent. Enforce disclosure and fair dealing rules already on the books.

Organizing a global settlement for banksters is the last thing Mr. Obama should be organizing. It leaves homeowners in the cold, rewards the banksters and assures us all that they will continue to engage in outsized risks, in the knowledge that damage from them will never be their problem.

Oh, but Mr. Obama, ever pragmatic, understands that he has to give a little to get a little. He feels he must agree to a global settlement with the banks in exchange for a tiny sliver of help for homeowners. His sense of proportion and fairness are constipated. His behavior abuses the law, responsible government and his supporters’ goodwill, because he never gets, he only gives.

Eric Alterman might say that Mr. Obama is being pragmatic. The system he operates within prohibits enforcing the law against the banksters because he needs their contributions to pay for his re-election. Moreover, anything requiring full legislative authorization would fail in the Republican-controlled House.

An opposing view is that if Mr. Obama’s actions simply fuel the power he claims to want to fight, he’s manning the bellows for the fire that is melting his constituent’s lives and fortunes. That makes him an opponent, not a would be supporter. He should rethink his oath of office and another one that ought to apply here; it starts, “First, do no harm.”

You have to move the decimal point on that $20 billion at least one position to the right, if the object is to generate a pool of funds that will make whole the millions of actors harmed by the banksters mortgage fraud. That’s still only one side of the coin; there is the programmatic wrongdoing on the bankers’ part to deal with, not just the losses it caused others.

A better framing would avoid emotion-releasing terms like “settlement”, though I’m sure that’s exactly what all parties but homeowners are seeking. A more accurate framing, would be “campaign” or “program”, because like the S&L fraud in the 1980’s, this debacle will take a decade to sort out.

The learned Mr. Obama ought to have learned by now that self-regulation is a contradiction in terms. If he truly wants banks to accept settlements with borrowers in which the principal and/or interest is lowered to market, he will have to make it mandatory. Nothing could be clearer. He can do that several ways, but strenuous and rude arm-twisting will be involved in all of them. He can’t pretend to be above the fray; he and a large team need to get down like Bobby Kennedy and rap knuckles on cement.

Equally obvious is that once the terms of a program or “settlement” are agreed, the banks will begin devising ways to get out of it, just as credit card companies and health insurers are doing with his weak attempts to re-regulate them. Any effort to regulate these MOTU will be a guerrilla war, not a game of bridge.

From the following post on Naked Capitalism today, it seems that MERS is confident that some such deal is in the bag for them. The post tells of a phone call between Richard Anderson, from the MERS legal team, and Daniel Pennell, a systems expert who has testified before the Virginia House of Representatives on MERS:

Daniel Pennell: MERS Counsel Calls Me

Mr. Anderson said that he could not comment on the OCC investigation or actions but then went on to say that no administration would allow, nor would it allow a judge’s ruling, to threaten the legal standing of a MERS member to take a home. He pointed out that MERS has some relationship with 60% of the mortgages in the country worth in the trillions of dollars. In other words, in his opinion, regardless of the law or the findings of the OCC, MERS is too important because of the dollars associated with its operation to be allowed to be found to be acting illegally.

In short, this man, who from his position as legal counsel for the party under investigation has inside knowledge of the OCC investigation, is confident that the government will do all it can in its power, regardless of the evidence, to assure that MERS and its members are allowed to proceed as they wish because of the potential financial costs.
(emphasis added)

It is truly reminiscent of the public option fiasco, and I would guess that yesterday’s DOMA announcement is supposed to function as cover.

From Nakedcapitalisim (emphasis mine):

[T]he mortgage “settlement” trial balloon floated in the Wall Street Journal this evening is an offense to common sense and decency. Notice how the word “fraud” is pretty much verboten in the MSM; the latest code word for what went awry is “breakdown”. This implies a benign sort of neglect, simply of not doing sufficient maintenance which led fussy machinery to quit working. It is mean to avoid contemplating, let along uncovering, Pinto-type decisions of weighing the costs of making the vehicle safer versus the litigation losses resulting from incineration by exploding gas tanks.

The magic number across the industry is a mere $20 billion in civil fines or payments to fund loan mods. We know from BP not to have a great deal of confidence in settlement funds. It is not yet clear what scope of activities get a free pass (fraudulent servicer charges and impermissible compounding fees? failure to convey notes to mortgage trusts as stipulated in the PSA? foreclosing on home where HAMP mods had been promised?) but the industry will want any waiver to be as broad as possible. But in any kind of settlement of fraud, like securities fraud charges, various responsible parties are also barred from working in the industry, sometimes for life. None of that is on the table.