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A contrarian's view of the recent mortgage foreclosure settlement

Flickr by respres

Esteemed Levy Institute scholar L. Randall Wray offers his take on the foreclosure settlement. Wray’s incisive commentary really gets at the bigger “too big to fail” problem. This involves the government’s continued coddling of the big banks for fear that any significant punishment will destabilize them and lead to another financial crisis. It is worth noting that the settlement allows for criminal prosecutions relating to foreclosure fraud. The question remains whether prosecutors will choose to investigate alleged abuses fully and bring charges where appropriate…

State AGs Cave to Banksters

Author: L. Randall Wray

Yves Smith at Naked Capitalism has long been skeptical of the negotiations by the State Attorneys General and the banksters over the foreclosure frauds (see here http://www.nakedcapitalism.com/2012/02/settlement-breakdown-by-state-plus-other-official-propaganda.html). And while I had held out some hope that California and New York would either refuse to join, or would insist on good terms, today’s announcement of the settlement makes it clear that the banksters had their way. I expect that the US Attorney General, Eric Holder and HUD Secretary Shaun Donovan played important roles in making sure the bank frauds would only get little slaps on the wrist.

Some of the details are not clear, but apparently the 750,000 people who had their homes stolen from them will get a mere $2000 a piece in compensation. That is how this Administration values homeownership. Yep, a bankster can take your home and you might get two thousand bucks–and with that you can pay first and last month’s rent on a cheap, run-down apartment if you are willing to live in a low rent city.

It also gives you some idea of the cost of buying out 49 states: $2.75 billion. Yep, that is all that the states get out of this settlement. They’ll look the other way and let you move in, completely destroy property records and proceed to steal the homes of your citizens while destroying your economy and tax revenues–and for under 3 billion measly dollars you can buy off their chief prosecutors.

What about underwater borrowers? Well after crashing the real estate markets, the worst of the banksters have agreed to provide $3 billion for relief. How far underwater are homeowners? $700 billion. So far.

Oh, and Holder managed to get $750 million for the Federal Government. Boy is he a tough negotiator!

The deal is with the five top mortgage servicers: BofA, JPM-Chase, Wells Fargo, Citi, and Ally Financial. Notice a pattern? Yes, 4 of the top mortgage servicers are also members of the “Dirty Half Dozen” biggest banksters–all we would need to add is Goldman and Morgan-Stanley and we’d have the list of those most responsible for causing the crisis in the first place. (Yes, there were a handful of others, including Bear, Lehman, Merrill, IndyMac, and Countrywide–that either were closed or folded into one of the dirty half dozen.)  Ally is the new name of GMAC–the financial fraudster arm of GM.

The following table was provided with a draft news release. Note it totals to $40 billion; the reason was not made clear–but presumably it has to do with an estimate of indirect borrower relief from short sales and so on.

The filename of the draft press release sent to me was titled “Settlement Swiss Cheese”. I suppose that was in reference to all the holes in this mess that will allow the banksters to continue to steal homes with impunity.

Amount = $ million

State Amount State Amount State Amount
Alaska $11 Kentucky $59 North Dakota $4
Alabama 107 Louisiana 68 Ohio 336
Arkansas 39 Maine 21 Oklahoma 48
Arizona 1,599 Massachusetts 318 Oregon 310
California 16,495 Maryland 959 Pennsylvania 266
Colorado 205 Michigan 790 Rhode Island 172
Connecticut 190 Minnesota 281 South Carolina 223
Delaware 44 Mississippi 47 South Dakota 8
DC 46 Missouri 197 Tennessee 147
Florida 8489 Montana 19 Texas 428
Georgia 815 Nebraska 26 Utah 171
Hawaii 71 Nevada 1,480 Vermont 6
Idaho 114 New Hampshire 44 Virginia 480
Illinois 1,200 New Jersey 838 Washington 648
Indiana 146 New Mexico 92 West Virginia 34
Iowa 40 New York 741 Wisconsin 140
Kansas 50 North Carolina 338 Wyoming 10