One would think the homeowner relief settlements with five major banks just announced by the Justice Department would be welcome news for people who spend their days pretending that they care about the 99%. But oh no. The settlement just announced may have $17 billion in principal reductions for a million distressed borrowers and $3 billion in refinancing for underwater-but-current-on-payment mortgages, but apparently, you can't sell branded products on those and stuff your own coffers. The settlement may have $2,000 checks waiting for 750,000 responsible homeowners who were foreclosed on between 2008 and 2011, and it may include $5 billion in cash payments to states to fund consumer protection and foreclosure prevention efforts, but it doesn't require all bankers to immediately drown themselves in the Mississippi.
Yes, the settlement requires banks to look at loan modifications and other options and makes foreclosure a last resort, bans robo-signing, stops banks from moving forward on foreclosures while a loan modification process is pending, gives borrowers a right to appeal modification denials and creates a single point of contact for borrowers. Yes, though the initial figure is $25 billion, the way the settlement and the payouts are structured, benefits from the 5 biggest lenders to homeowners could reach $40 billion. And yes, the settlement figure can reach $45 billion if all major servicers decide to join, but hey, why would you want $45 billion in relief for homeowners and a mandated loan modification program when you can instead bitch and moan about perpwalks that the settlement leaves the door wide open to?
There is also a provision for banks to comply with the agreement promptly and properly or be charged up to $5 million per violation in serious cases and up to $1 million per violation in other cases. The agreement provides incentives for banks to get the money out within 12 months, and 75% of the settlement is required to be paid out within 24 months. Should banks fail to adhere to the timelines, they can also be charged hefty fines.
In summary, the agreement not only makes the banks pay out billions, it also sets new, consumer friendly servicing standards and fund state and federal consumer protection efforts so that the abuses of the past can never happen again.
So of course, you couldn't help but expect the fake, self-proclaimed defenders of the Left to loudly whine.
Firedoglake is the loudest on the manufactured outrage on this one (it is ALL they are talking about today), and they are joined by groups like the racist "Progressive Change Campaign Committee," and the bigwigs at Daily Kos. There is absolutely no logical rhyme or reason for opposing this deal from a progressive point of view, of course. The biggest hue and cry from these poutrage sellers is, of course, that by settling at all, the state attorneys general lose the ability to jail the bankers. Except that when they tell you that, they are unapologetically lying through their teeth. Here is what the Justice Department press release says on the matter:
The agreement resolves certain violations of civil law based on mortgage loan servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement does not prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group. The United States also retains its full authority to recover losses and penalties caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan. The agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers.In fact, the only "immunity" banks get is on narrowly defined "robo-signing" civil cases. David Dayen of Firedoglake, the most self-hyped "journalist" of our generation, has what he thinks is a clever answer to this, in a piece taking on the authorities for closing the bankers' path to the big house. His answer is, and I quote, "Come on."
[Iowa AG Miller] will tell you up and down that no criminal claims were given up in the settlement.Too cute by half. See, David thinks that you are really, utterly stupid. What he is hinting at here is the idea that many prosecutors extract civil penalties or settlements from big financial defendants with the threat of a criminal prosecution. David is clawing at the idea that such threats of criminal prosecution - or an ongoing criminal investigation or prosecution - prods the defendants to settle the civil case, in order to avoid jail time. And David Dayen is in favor of that - i.e. using the criminal probe's threat as a way to extract a big civil penalty.
Come on. If AGs cannot win additional civil penalties on foreclosure fraud, they are not going to try to bring criminal charges. That’s just not how it works.
But he's hoping you are dumb enough to miss two crucial points here: (a) that is exactly what happened here - the banks buckled under the threat of federal and state criminal prosecutions and chalked up what could be $40 billion in civil settlements; and (b) if David Dayen is for using the threat of criminal prosecution to extract civil settlements, he is not really for jailing the bankers. Otherwise, he would be asking the state attorneys general and the DOJ to go after the banks criminally under the authorities they retain under the settlement, not be whining about how once the civil matter is settled, how it cannot be re-settled using a criminal case. You cannot both complain about bankers not being jailed and then turn around and whine about why the threat of jail time wasn't used to get a bigger civil settlement.
As a matter of fact, some authorities are stepping up their criminal and other enforcement actions on the banks using the money that will come from this very settlement! Take California's AG Kamala Harris, for example:
To speed investigations and strengthen prosecutions of these mortgage cases, California will expand its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team. The state will continue its investigative alliance with Nevada, that allows the sharing of resources, information and strategies, and will look to collaborate with additional states focused on a law enforcement response to the wave of mortgage fraud.As Rick Perry would say, oops.
When I wrote about this settlement in progress back in August of last year, I outlined most of these protections, and said that a deal to help the homeowners was essential, and that even with such a deal, avenues to criminal prosecution of the banks would remain available. That is exactly what happened today, and the reactionaries on FDL are so beside themselves that the Obama Administration has won yet another clean victory for the American people that they will lie, cheat, distort and simply ignore the facts.
What FDL and their friends and followers have made clear is this: they do not care one iota about helping homeowners. In fact, when homeowners are helped, they consider it a defeat for themselves on two fronts: First, as many economists have predicted, this deal may finally give falling home prices a floor and start to improve the housing market - which is, of course, terrible news for people doing their level best to elect a Republican president. They no longer retain a big weapon to whack the President with, and that is, indeed, sad for them. Second, they do not want homeowners to be helped. Their preferred outcome is jailed bankers who pay nothing to fix the mortgage fix. Their goal is not justice, it is revenge.
David Dayen, Jane Hamsher, Adam Green, Joan McCarter and their ilk have a personal vendetta against the Democratic president who won without begging at their alter. Also, they have a vested political and financial interest in defeating the president, and failing that, portraying him as a failure. Because for all the merchandise and memberships they sell, they really truly have one main product for sale: manufactured poutrage. They want to prove that they are the holy grail a Democrat has to go through to become and remain president, and success of the Obama administration - and therefore by definition, the helping of the American homeowner, consumer, and patient - is antithetical to that financial and political interest. Poutrage and hatred tend to generate more attention (and thus money) and reason and calm examination of the facts.
They haven't done so just in this case. They have opposed health care reform that is now helping countless young people stay on their parents' insurance, countless seniors save money on prescription drugs, and countless previously uninsurable Americans get insurance, and that will, in time, insure 32 million additional Americans, including a massive expansion of Medicaid and community health centers. They stood opposed to Wall Street reform that was the farthest reaching re-regulation of the financial industry since the 1930s. They have opposed the first tax break for the working poor in memory in the form of President Obama's payroll tax cut. They have ridiculed the debt limit compromise in which the President protected every progressive priority and put the bloated defense budget on the chopping block.
Looked at individually and as a whole, one could well deduce that the people who have consistently opposed the pro-consumer, pro-patient, pro-working American agenda of the President are in fact as invested in the failure of America under an Obama presidency as Rush Limbaugh. And one would be correct.