New York Times: The Banks Win, Again
Despite some initial boasting and misdirection the Mortgage Fraud settlement by the Too Big To Jail Banks is actually… total bullshit. From the New York Times:
Under the terms of the settlement, the banks will provide $26 billion worth of relief to borrowers and aid to states for antiforeclosure efforts. In exchange, they will get immunity from government civil lawsuits for a litany of alleged abuses, including wrongful denial of loan modifications and wrongful foreclosures. That $26 billion is paltry compared with the scale of wrongdoing and ensuing damage, including 4 million homeowners who have lost their homes, 3.3 million others who are in or near foreclosure, and more than 11 million borrowers who are underwater by $700 billion.
The settlement could also end up doing more to clean up the banks’ books than to help homeowners…
This is actually another bailout under the guise of law enforcement.
When it comes to helping homeowners, banks are treated as if they still need to be protected from drains on their capital. But when it comes to rewarding executives and other bank shareholders, paying out capital is the name of the game. And at a time of economic weakness, using bank capital for investor payouts leaves the banks more exposed to shocks. So homeowners are still bearing the brunt of the mortgage debacle. Taxpayers are still supporting too-big-to-fail banks. And banks are still not being held accountable.
But it gets even better according to two policy experts in this Bloomberg Law discussion. The experts, Matt Stoller of the Roosevelt Institute and Neil Barofsky, the former Special US Treasury Department Inspector General for the Troubled Asset Relief Program (TARP), explain that the settlement is not only insufficient to help homeowners but, echoing the Times editorial, actually hurts homeowners and America’s system of justice:
So not only have fines been reduced, subsidies guaranteed, but under this agreement it is permitted to fraudulently foreclose on homeowners.
There is no law in America anymore, only Power.