Morning Report: Foreclosure Relief?

Business model works—for banks

“Administration officials and attorneys general are ‘very close’ to a settlement with major banks of the so-called robo-signing issues after about a year of negotiations, Mr. Donovan said at a conference of U.S. mayors meeting in Washington.”

http://online.wsj.com/article/SB10001424052970203735304577169014293051278.html?mod=googlenews_wsj#

There are still the six state AG’s with their own ideas about this settlement, but it appears that the business model that the banks have constructed, enabled by regulators that offer settlements that allow them to avoid prosecution and accountability, will again succeed to the detriment of the homeowners victimized by their practices.

This time it is Housing and Urban Development making the offer to “resolve” illegal robo-signing with an acceptable fine that does nothing to deter the incessant thievery that appears to be inherent to the financial services sector. Can’t these people do anything legally, consistent with hones business practices, or are they obliged to run scams or commit criminal offenses against their customers to turn a profit?

It looks more and more like the latter is true. This is just the latest example. Who besides banking executives are consistently excused by authorities for doing things that would be considered felony theft in any other sector? Is illegal foreclosure really illegal, or does it become legal when the perpetrators are willing to pay a nominal fee to their regulators?

Some will say that the settlement is intended to help the victims of these practices, and there are some provisions for that, but to say a “‘number of families’ who were harmed by foreclosure-processing mistakes would be directly compensated by banks” is hardly a comprehensive solution. It won’t stop the banks from doing it again, and it won’t help those who may be sleeping in their car or a shelter somewhere.

For now, “the five banks and the state attorneys general and Obama administration officials are pushing a deal of $19 billion or more, depending on how many states join the settlement. The size of the settlement could grow if regional banks are included, although those banks could settle separately.”

“The proposed pact would potentially reduce mortgage balances and monthly payments by more than $25bn for distressed US homeowners, these five people said.

“The tentative agreement still must be approved by all 50 state attorneys-general, and negotiators have previously missed proposed deadlines. Participants described the proposal terms as set, meaning the states will be asked either to agree to them or decline to participate.”

Ms. Harris and the other state AG’s can still object to the settlement and act independently. Note also that the agreement pushed by the Obama Administration also precludes civil litigation for illegal lending practices.

“The amount of potential aid is contingent on state participation and would decrease significantly if big states do not sign the agreement. New York and California are among several states that have voiced concerns about the terms of the proposed deal with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. New York and California are particularly concerned with the part of the deal that would absolve the banks of civil liability for allegedly illegal mortgage-related conduct.”

http://www.emptywheel.net/2012/01/21/what-do-you-call-a-cornhusker-kickback-for-california/

The banks have woven a tangled web, and they are doing quite well if you look at their profits in the last quarter. But in a society that is supposed to be based on the rule of law, those laws supposedly for the purpose of enforcement and deterrent, it continues to be a source of amazement that some individuals in the banking sector function without regard for them and in fact profit from making a mockery of those laws.

And what will happen to that $19 billion if the Big Five agree to settle? Will it go directly to those harmed or will it disappear into government coffers as we have noted in the past? In this instance, it is supposed to go to mortgage principal reduction. How likely is that? And even if $25 billion is part of the relief agreement, how significant is that relief when one considers the actual number of $7 trillion in cumulative lost value?

“Many economists, including some at the Federal Reserve, are urging President Barack Obama to do more, and the president will be ‘aggressive on housing’ in his State of the Union address on Tuesday, his housing secretary said last week.”

http://online.wsj.com/article/SB10001424052970204301404577173001251941984.html

So once again we’ll have to wait and see what the President does after he makes a promise. Is anyone holding out “hope” that relief will be swift and significant? The settlement agreement is not a good sign. Note that the article above offers three specific steps that are necessary to turn the housing market around, or at least to stop the slow deflation that continues to undermine the middle class.

SF protest with photos: Occupy the Courts

“Protesters also decried the role that the Supreme Court case Citizens United, now two years old, has played in pulling representative democracy out of the grasp of ordinary citizens. As many as 2,000 protesters took part in all of the activities. Thirteen people were arrested in actions at Wells Fargo and Bank of America.”

http://www.fogcityjournal.com/wordpress/3329/occupy-wall-street-west-ends-hibernation-in-quest-to-right-america/

Federal buildings in Los Angeles, Santa Ana and Santa Barbara, and the U.S. Bankruptcy Courthouse in Riverside were all occupied for speaking engagements by local organizers and groups supporting the movement.

http://www.nbclosangeles.com/news/local/Occupy-Federal-Courts-137786953.html

Afro-American clergy offers support

“A growing number of African American pastors in the Washington area, including the Rev. Carroll A. Baltimore Sr., president of the Progressive National Baptist Convention, have embraced the Occupy movement.”

http://www.washingtonpost.com/local/african-american-pastors-express-support-for-occupy-movement/2012/01/18/gIQAyofFEQ_story.html?tid=pm_local_pop

SOPA details ominous

“Few would deny that there are legitimate reasons for protecting intellectual property. But SOPA and PIPA encountered such vitriol in part because of the harsh penalties proposed for those accused of copyright infringement. Uploading a clip of yourself singing a popular song on YouTube, for instance, could result in a felony conviction and up to 5 years in prison.”

http://austin.culturemap.com/newsdetail/01-20-12-12-40-wethepeople/

Occupy Congress “official” video:

http://youtu.be/dK7MWRMN_l4

Davos igloos for summit:

“OWS can serve as a wake-up call to policymakers that fawning over the 1% is not an exclusively American phenomenon — and that government has a role, working alongside the free markets, in improving conditions of the underclass.”

http://www.thestreet.com/story/11381595/1/occupy-wall-street-goes-global.html

Grumpy