And how to get away with it.
Mortgage Fraud Settlement Announced:
After months of painstaking talks, government authorities and five of the nation’s biggest banks have agreed to a $26 billion settlement that could provide relief to nearly two million current and former American homeowners harmed by the bursting of the housing bubble, state and federal officials said in Washington on Thursday.Before we keep going, let's understand the fuzzy math. A $26 billion settlement is going to erase the $5-7 TRILLION lost in equity by homeowners since 2007 (er, I mean "stolen from homeowners since 2007")? Got it.
Is Big Mortgage signing on? You bet they are.
And get this: they're painting this as a victory for homeowners (underwater, illegally foreclosed upon, etc.).
The deal announced Thursday is about “righting the wrongs that led to the housing market collapse,” said Eric H. Holder Jr., the attorney general. “With this settlement, we recover precious taxpayer resources, fix a broken system and lay a groundwork for a better future.”
Financial shares were mixed after the announcement, but several analysts said they considered the settlement to be good news because it removed one cloud hanging over the industry. They also said the five mortgage servicers in the agreement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — had already set aside most of the money.
Shares in Bank of America, which will pay the most as the nation’s biggest mortgage servicer, actually rose 1 percent in afternoon trading after a 4 percent gain Wednesday.
Still, the agreement is the broadest effort yet to help borrowers owing more than their houses are worth, with roughly one million expected to have their mortgage debt reduced by lenders or to be able to refinance their homes at lower rates. Another 750,000 people who lost their homes to foreclosure from January 2008 to the end of 2011 will receive checks for about $2,000.LMAO. Two g's? That's it? As someone joked over at Marketwatch, that will give homeowners enough money to rent a storage unit for a year to put all their shit in. All their shit which was illegally (via robbery, burglary, kidnapping, etc.) dumped from their rightful homes.
The mortgage fraud settlement being announced today is a tiny drop in a big bucket. It does not do justice for the millions of homeowners who lost their homes or hold the banks fully accountable for their crimes. For homeowners who were defrauded and lost their homes, $2,000 is too little, too late. It is a paltry down payment toward full relief for homeowners.And it could take up to three years for the checks to arrive (which also begs the question, where will the government mail the checks?).
Oh, and remember when I wrote this just days ago about Obama's desire to hurry this whole thing along?
Obama is famous for "looking forward, not backward" and for not wanting to "re-litigate the past."Check the president's comments this afternoon on the settlement:
President Obama called it a landmark settlement that would “begin to turn the page on an era of recklessness.”Oi. Supposedly, the agreement does leave open the door the possibility that some criminal prosecution could take place for the actions leading up to the bubble.
[Obama] said the government will continue to pursue violations of law in the packaging and selling of risky mortgages that led to the crisis. “We’re going to keep at it until we hold those who broke the law fully accountable.”But the actions taken by Big Mortgage since the crash (specifically the millions of illegal foreclosures and the rife criminal conduct committed from 9/08-12/11) have been forgiven via the terms of the settlement.
So, the direct victims of the crime get pennies for their victimization, while Big Mortgage gets immunity from most criminal prosecution, and a slap on the wrist in terms of a civil penalty. In fact, when you look at huge civil settlements in history, this doesn't even come close to the S&L Bailout of $200 billion or the Big Tobacco settlement of $250 billion.
But the one thing they all have in common? You're footing the bill for it.
That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.Ain't that America for you? The Wall Street sociopaths who destroyed the economy escaped justice in criminal court and then got YOU to pay their civil fines for them.
Again, the details of this massive, 50 state agreement are still forthcoming and will be rolling out over the next few days, but at first blush, I join my brethren, who have been crying out for justice over the past four years, in feeling mostly defeat today.
UPDATE: Matt Stoller's take in Salon.