Posts tagged ‘JPMorgan Chase’

The Injustice: What A Rip-Off Bank Settlement Highlights the Feds’ Foreclosure Flop

The $26 billion settlement that 49 attorneys general wrested from the big banks today is a pittance compared to the damage done—but they were forced to act by inaction in Washington.

Go a head and hate the deal the federal government and 49 of the country’s 50 attorneys general just finalized with five of the country’s largest banks over foreclosure fraud. There’s plenty to dislike about the settlement, starting with the price tag: $26 billion. That’s a slap on the wrist given the reckless, sometimes criminal behavior of the banks, and a pittance compared to the trillions of dollars homeowners collectively lost during the subprime debacle. Wade into the fine print and the deal seems even more disappointing. One settlement site says that it can take up to three years for homeowners to know if they’re even eligible for a cash payment. Victims losing their home in a foreclosure can expect a cash payment of between $1,500 and $2,000—enough to maybe cover the costs of a rented truck and storage once they got the boot.

Be mad, but make sure to be angry at the right people. Bank regulators in Washington, and not the country’s attorneys general, should have been cracking down on banks that were routinely evicting people despite incomplete documentation. It’s the U.S. Justice Department and other federal agencies that should have gone after the banks when they were caught fabricating legal papers and routinely “robo-signing” thousands of affidavits at a sitting. The Obama administration also might have added teeth to HAMP (Home Affordable Modification Program) rather than relying solely on incentives, which explains why HAMP has helped only a small fraction of the 3 million to 4 million homeowners it was created to help.

Bank regulators in Washington should have been cracking down on banks.

The $26 billion settlement that 49 attorneys general wrested from the big banks today is a pittance compared to the damage done—but they were forced to act by inaction in Washington, Susan Walsh / AP Photo

“The attorneys general shouldn’t be here, but Obama fell down on the job,” says Prentiss Cox, who in 2006 led the successful case against Ameriquest, an investigation that cost the lender $325 million in fines, when he ran the Minnesota attorney general’s consumer-enforcement division. (He now teaches at the University of Minnesota Law School). “The Obama administration abdicated responsibility. So while many of us are colossally disappointed with where we are, you can’t blame the AGs. The AGs were at least willing to step to the plate.”

And the AGs did a pretty good job, all things considered. As written, the final deal pertains only to the wrongs the five banks (Wells Fargo, Citigroup, JPMorgan Chase, Bank of America, and GMAC/Ally) committed while booting people from their homes. It won’t tie the hands of any AG seeking to investigate subprime frauds beyond the foreclosure mess. The country’s more aggressive AGs, such as Delaware’s Beau Biden (the vice president’s son) and New York’s Eric Schneiderman, can still pursue claims against the banks over origination (fraud committed when making the subprime loans in the first place) or securitization (the packaging of these loans by the large Wall Street firms and the deceptive means they often used to peddle them to unsuspecting customers).

Attorney General Eric Holder, center, announces a settlement regarding mortgage-loan servicing and foreclosure abuse, at the Justice Department in Washington, Feb. 9, 2012, Cliff Owen / AP Photo

“I’ve said from the start,” Beau Biden told me back in September, “I’m only willing to sign off on a deal if it allows us to continue looking into misconduct in the areas of securitization and origination.” The deal also doesn’t prevent individuals from suing their bank or stand in the way of the many private class-action suits that have been filed over improper foreclosures.

And the deal is about more than just money, even if the dollar amount seems about the only issue most people are focusing on. It’s little solace to those who have already been unfairly booted from their home, but it establishes the steps that any bank must take before seizing someone’s home—or face the consequences of more legal action. It will help those millions of people still facing foreclosure, which has been a priority of old hands in the fight against subprime abuse such as Ira Rheingold, executive director of the National Association of Consumer Advocates.

“The most important thing for people like me is fixing the damn system,” Rheingold says. “It’s making sure people who can save their homes have the right to save their homes.” And with the sigh of someone who has been fighting this fight for a long time, Rheingold adds, “I think sometimes we lose sight of what’s possible to achieve.”

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Gary Rivlin is a special correspondent for Newsweek and The Daily Beast. He is the author of five books, including Broke, USA: From Pawnshops to Poverty, Inc.—How the Working Poor Became Big Business. He has worked as a staff reporter for The New York Times, where his beats included Silicon Valley and New Orleans after Hurricane Katrina.

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Staring At Empty Pages

Thursday 26 January 2012

by: William Rivers Pitt, Truthout | Op-Ed

Occupy Wall Street protesters in Zuccotti Park in October 2011. The movement was not directly mentioned in President Obama’s State of the Union address, but many themes were. (Photo: Ed Yourdan / flickr)

Staring at empty pages,
Centered ’round the same old plot,
Staring at empty pages,
Flowing along the ages…

– Traffic

The Occupy Wall Street movement should spend today doing a nice little victory lap, because it seemed for all the world like its members were ghost-writers on President Obama’s State of the Union speechwriting staff. Though he never directly mentioned the movement itself, Mr. Obama spent a great deal of time on Tuesday night underscoring many of Occupy’s most central themes: income inequality, tax fairness, and the need to rein in the illegal and immoral behavior of the nation’s largest financial institutions.

Talk is cheap, of course; despite all of Mr. Obama’s high-flown rhetoric, his administration is reportedly prepared to cut a disgracefully easy deal with the five banks most directly responsible for the financial meltdown, giving his so-pretty words a hollow ring:

Five banks – Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC)  -would pay the federal government $25 billion. About $17 billion would be used to reduce the principal that some struggling homeowners owe, $5 billion more would be used for future federal and state programs and $3 billion would be used to help homeowners refinance at 5.25 percent. Civil immunity would be granted to the banks for any role in foreclosure fraud, and there would be no investigations.

There are several reasons why this is could be a terrible deal. For one, the dollar amount is inadequate in relation to both the tremendous loss of wealth via mortgage fraud and the hefty balance sheets of these massive companies. Furthermore, the banks might be allowed to use investor money instead of their own funds – this makes the penalty even lower. Beyond all that: it’s extremely hard to justify the absence of investigations and punishment for mortgage fraud that was so widespread and so damaging to people’s lives.

There are also many other, more serious problems besides a lack of punitive action. The small amount of money – and the federal government’s recent inability to truly help underwater mortgage holders, of which there are currently 11 million – means that the victims of mortgage fraud might not see enough relief. And perhaps most importantly, with no real punishment for widespread damaging fraud, what are the incentives on Wall Street not to engage in similarly destructive practices once again?

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Yeah, kind of makes Mr. Obama’s proposed Financial Crimes Unit seem like drovers sent out to catch the horses three years after the barn door was left open, doesn’t it? The hope of getting justice for the crimes that brought down the economy has been feeling more remote with each passing day – if there ever was any real hope to begin with – and the soft plea about to be copped by the worst offenders appears to sound the death knell for any such action. Funny how that part didn’t find its way into the speech. “We’ll get ’em from now on,” seems to be the theme.

Sure you will.

Still, I suppose fluffy rhetoric has its place in any speech, especially a straight-up campaign speech like this one. It certainly did Mitt Romney no favors. His campaign has all the timing skills of a bad comic on open-mike night; by releasing his tax returns on the doorstep of the State of the Union, thus revealing his extravagant income, off-shore financial havens and amazingly low tax rate, Romney became the poster-child for everything the president was talking about on Tuesday night. This will serve the president’s re-election campaign well in the general election, but Mr. Romney still has a Gingrich problem to solve before he gets there. The Florida GOP primary is five days away, Romney’s once-epic lead there has dwindled to practically nil…and if he loses that one, the stench of panic emanating from RNC headquarters will be palpable.

So, sure, words have their place, especially in politics.

Not everyone out there is talking without doing, however.

A few nights ago, Jacob Burris, the campaign manager for Arkansas Democratic Congressional candidate Ken Aden, came home to find the family cat dead in front of his house, its skull crushed, its eyes hanging out of their sockets, with the word “LIBERAL” scrawled on its body. Mr. Burris’ four children were with him when he made the grisly discovery.

Kermit Womack, a talk show host for radio station KURM in Arkansas, has been releasing the addresses of political opponents he doesn’t like over the air. While no firm, direct link has been established, it can be assumed that someone decided to take violent action after the location of Mr. Burris’ home went out over the air. It was a cat, this time…but given the gruesome nature of the act, Mr. Burris must correctly be wondering if it could have been one of his children.

Not everyone out there is talking without doing, you see. The best lack all integrity, the poet said, while the worst are filled with passionate intensity. It will take more than empty pages to counteract the hatred, violence and extremism that is sweeping across this nation.

Take note, Mr. President. Note it well.

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William Rivers Pitt

William Rivers Pitt is a Truthout editor and columnist.  He is also a New York Times and internationally bestselling author of three books: “War on Iraq: What Team Bush Doesn’t Want You to Know,” “The Greatest Sedition Is Silence” and “House of Ill Repute: Reflections on War, Lies, and America’s Ravaged Reputation.” He lives and works in Boston.