For months, it has looked as if Iowa state attorney general Tom Miller and the Department of Justice have been effectively negotiating on behalf of the banks to try to secure a broad settlement to give the banks a talking point and create the perception that the mortgage mess is on the mend. In fact, it would not stop the train wreck in local courts, since a deal would not restrict the rights of borrowers. However, getting the AGs out of the equation would still be of benefit to the banks, since their investigations typically unearth information that assist private litigants.
But we have long thought that the settlement talks have been a weird PR exercise, in that if the talks were perceived to be getting momentum, they’d actually get momentum. But with no damaging findings from investigations to pressure the banks to the table, the only thing the AG group has to offer is a very broad release, and we’ve heard repeatedly that a lot of AGs regard that as problematic. And with good reason. The banks know what a release is worth, and given that bank stocks have responded well to news that these talks are moving forward, it’s pretty clear that the banks regard a broad release as cheap relative to what they are being asked to pay.
Three (New York, Delaware, and Massachusetts) have already defected, and we believe Nevada is an undeclared non-participant, and Arizona and California are likely to follow suit.
Moreover, the efforts to try to create the impression that the deal is going somewhere have been laughable. Instead, the reverse has happened. I’ve lost count as to how many times the press has reported that the intent was to ink a pact within weeks; the AGs (fortunately) haven’t yielded to this faux urgency. Not that the negotiators conducted themselves competently: the Tom Miller/Federal regulators presented a partial term sheet in early March, an unheard of move in deal-making (you don’t put your ask out piecemeal). And the AGs were kept in dark by Miller and had that draft sprung on them, which is exactly what you’d expect if someone was working against you on behalf of getting a deal done.
The latest update is comical, if you read between the lines. The deal is cash for a release. Everything else is decoration. And both sides of that deal are falling apart. The banks are squabbling among themselves as to who has to pony up what, with everyone except maybe BofA posturing that they really don’t owe that much. Oh, and the other side of the equation, the release? The banks and the AGs are not on the same page.
But if you read the Wall Street Journal article on the state of play on talks, you might well be fooled by the upbeat tone and the emphasis on the agreement on the stuff that does not matter (we and others went through the original AG term sheet, and it was pathetic, since virtually all of it was nice sounding exhortations which merely having the banks agree to comply with existing law!). For instance:
All sides have agreed to a framework that would govern how banks meet their obligations once a deal is reached. Those include principal reductions on certain mortgages, forgiveness of second-lien loans, restitution to borrowers and dealing with foreclosure-related blight. A person close to one of the banks said remaining differences are narrowing.
Earth to base, “remaining differences” are irrelevant if the biggest items aren’t close to resolution. And in fairness, the Journal did highlight the seriousness of the squabble on the banks’ side of teh table:
U.S. banks trying to negotiate a settlement over the home-foreclosure mess have hit a new hurdle: They are squabbling over how to split the tab.
The lack of a deal so far among the nation’s largest home-loan servicers has already depressed bank stocks, and an extended impasse could further spook investors.
“As time goes on, banks will lose the PR battle,” said Paul Miller, banking analyst with FBR Capital Markets. The terms of a settlement, he said, are less important than getting it done. “They need to get everything behind them.”
That isn’t how the banks see it. They want a broad release, otherwise the AGs will still have areas where they can litigate, and that will leave the matter unsettled.
We suggest readers keep the pressure on attorneys general. Call yours (you can find their phone numbers here). Tell them the banks lied, they promised they’d quit robosigning and document abuses and they haven’t. They can’t be trusted, so there should be investigations, including servicing software audits, and prosecutions, not a settlement.
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The deal is cash for a release.
I don’t recall what the cash is, and I can’t tell from this piece or the term sheet link. Is it a fine to the government?
If so, then just like taxation it’s worthless to the people since that money will just go right back down a rathole. We should never consider government-imposed fines on rackets or the rich to be any punishment whatsoever.
(A different story would be something like Levitin’s proposal that the money go to fund Legal Aid. That would be a worthwhile restitution. But as the piece said, anything like that’s a non-starter.)
So if that’s the case, then what’s being proposed here is nothing for a release. Get out of jail free.
Makes me think of prosecuters negotiating with arsonists.
I don’t recall barn burners being treated so lightly.
Is politicization of the law a root problem these days?
Ever since the Supreme Court stole a Presidential election, it has been plain and clear to anyone with open eyes that politicization of the law is the root issue of practically everything wrong with the US these days. It was probably a root issue before that, but it became blindingly obvious at that point.
God Bless you Yves and responders. YOU ARE ‘what the meaning of is is-‘ the REAL story.
How many more runs at this thing are these AGs going to make before they conclude that all the arrogance and deceit ‘in-the-face-of-the law’ that created this mess in the 1st place has not been deterred. Have the AGs read the news: the crimes continue.
Put down the bottled water. Go home. Investigate. Prosecute. Reel ’em in. Your People need you. Your Country needs you.
The whole idea of a 50 AG deal seemed so laughably unlikely on it’s face I have always wondered what the point is. Near as I can tell, the whole thing is just another facet of “extend and pretend” so that the banks can delay recconing for another quarter or two.
Wasn’t it “O” who said ” Let Them Eat Pie”, only in this cast, the baker – public – is mixing up a “Mud Pie” with real “mud”?
Washington hasn’t decided to chase the crooks, mobsters, and thieves from Wall Street, nor will they ever.
The Mafia has incalculable resources and influences, let’s get real before someone’s head explodes whilst posting on NC.
But there is all that HOPIUM stuff left over from the last election I am still smoking…….
Not as many cartoons on hopium as I would have expected.
Hopium bumper sticker http://dailybail.com/storage/hopium.jpg?__SQUARESPACE_CACHEVERSION=1284051169533
Hopium and Maslow’s Hierarchy of Needs http://grumpajoesplace.files.wordpress.com/2009/09/pyriamidofneed0001.jpg?w=468&h=347
Hopium poster http://farm3.static.flickr.com/2548/4035274940_9cab615827.jpg
The average bloke can always file papers to have his or her AG impeached. Get all the soccer moms, hippies, ‘normal’ folk and have them sign petitions to mitigate the threats from jealous and arbitrary feudal lords.
Called New Jersey’s AG phone number and was transferred four times to a final “Consumer Affairs” extension that places you on “hold for the next available agent” forever. N.J. AG is not interested in consumer complaints. They are too busy doing NOTHING. Previously, I had written to the AG to ask a simple question that I believe even court judges don’t know and that is if notaries from out of state are required to submit a form(Certification) that allows them to be accepted in New Jersey. New York has such a requirement. After passing the buck to several departments within the AG’s office, I have yet to get a written answer. This is only a minor problem. The BIG PROBLEM is that New Jersey courts and judges have allowed banks and their foreclosure attorneys to submit Certifications on “Amount Due”(that do not need to be notarized) instead of AFFIDAVITS that do need to be notarized and REQUIRED by law. The banks have been fighting back this little but important part of the foreclosure process, but fortunately the New Jersey Supreme Court has had to reinstate this twice in it’s Order to Show Cause. Now that the affiant/notary have already perjured themselves, the court wants the Plaintiff’s attorney to reaffirm the acknowledgements by perjuring the attorneys. Since there has been no prosecutions of notaries, Robo-signing attorneys will be the problem included for New Jersey.
“The bankers who midwifed its [MERS] birth hired Covington & Burling, a prominent Washington law firm, to research their proposal. Covington produced a memo that offered assurances that MERS could operate legally nationwide. No one, however, conducted a state-by-state study of real estate laws.” — Powell and Morgenson
Attorney General Holder filed scores of civil recovery actions to reclaim for taxpayers the billions in excess salary and bonuses pocketed by the people who lost/squandered the life savings of millions of Americans?
Here’s the latest desperation play from BofA:
BofA Donates Then Demolishes Houses to Cut Glut
http://www.bloomberg.com/news/2011-07-27/bank-of-america-donates-then-demolishes-houses-to-get-rid-of-foreclosures.html
Last I checked, we still have a large population of homeless people in Chicago, Cleveland and Detroit where they plan to demolish houses. Remember this next time you hear someone talk about how “efficiently” the market allocates resources. This is waste on a monumental scale.
Kind of twists my brain,
what is the end game?
The banks *have* no endgame.
There’s just a desperation series of looting ploys. I expect the execs are all trying to pull an Angelo Mozilo and get out before the collapse.
Kinda twists my brain too, I mean the press has articles (such as the one above) that are nearly vacant of content or valulable information. AGs in nearly every state have limited funding, generally functioning as protective stooges bought already by Banks, there are just as likely to go after some small business for cheating customers on their karate memberships.
Has anyone ever called the generally worthless stiffs in an AG’s office? They do not give a fuck, they wouldn’t if half of your state was on fire (if bank approved). They don’t care about you, you can go to hell.
This is a revolutionary moment on slow boil, the shit that is happening in courts nationwide is unbelievable to behold, the absolute enabling corruption of former regulators and bankers is unbelievable and none, none have been held to account for what they designed. TBTF Banks are absolute criminal enterprises, only a fool continues to do business with them.
Got to congratulate President Obysmal; he chose as a US AG, a guy as compromising, bland and ineffectual as himself.
As for Tom Miller, he sold himself out for very cheap.
How long will these investigations go on? These are the AGs and they have the power to investigate. So far it seems that only a handful have even attempted to investigate. Get on with it.
Perhaps they think they can shake down the banks without doing any work. I totally agree that more investigations should be done – to find what has been done, or to put the matter to rest.
It seems to me that just a single case could set things in motion for the banks to settle. There has to be a single winnable case somewhere in the US. No need to swing for the fences. One case would set a precedent and a few others would confirm it. To make it even better each AG just needs to bring one case they can win. In short order there could be 50 unfavorable judgements for the banks.
And they don’t even have to get to the judgement. If things are looking bad for the banks it will be abundantly evident.
Absurd, bankrupted legitimacy,
“And the AGs were kept in dark by Miller and had that draft sprung on them, ..”
Don’t worry, it’s only a “financial coup” as the AGs represent what branch?