The New York Times describes the foreclosure fraud settlement in terms of inches. They say that a deal is “closer,” but they give little evidence to back that up. In fact, there’s more evidence here that the key AGs involved, who did not personally attend Monday’s session in Chicago with Shaun Donovan and other Administration officials, aren’t too keen on the terms. (I think I was the very first to report that the key AGs wouldn’t be at the meeting, by the way.)
This month, about 15 Democratic attorneys general who shared concerns about the course of the settlement talks met in Washington, including Ms. Coakley, Mr. Schneiderman, Catherine Cortez Masto of Nevada and Beau Biden of Delaware, who is a son of Vice President Joseph R. Biden Jr.
A week after the meeting, Mr. Donovan announced that a deal was “very close.” But none of those four attorneys general attended the meeting on Monday.
Neither did another important holdout, Kamala Harris, California’s attorney general, who opposed earlier proposed agreements.
In a bid to win support from California officials, Mr. Donovan proposed earmarking $8 billion in aid for beleaguered California homeowners, but that left other state attorneys general incensed, according to an official familiar with the negotiations.
“Attorney General Harris has consistently and repeatedly expressed concern about protecting her ability to investigate wrongdoing in the mortgage arena, and that remains a key lens through which she will evaluate any proposals,” her spokesman said Monday.
There’s a key point. The $8 billion is being dangled in front of Harris. But the other AGs, none of whom have earmarked money guaranteed to them in the deal, object to that element. This puts the brokers of the deal in a real bind. And none of the other Justice Democrats, the AGs mentioned above, had anything good to say about the deal. Beau Biden’s spokesman was the first to say flatly that they “opposed the settlement as drafted.”
This means that I was accurate in describing yesterday’s meeting as giving the illusion of progress without actual progress. That’s why Tom Miller had to back off and say that no settlement would get announced this week. And that means the State of the Union will have, at best, a brief allusion to the talks. There’s nothing to announce. “Very close” won’t cut it.
And I love that the NYT did the same math I did in breaking down this pathetic deal proposal:
About 11 million more own homes that are “underwater,” meaning the amount of money owed now exceeds the value of the home. They owe, on average, $45,000 to $50,000 more than their home is worth, according to Mark Zandi of Moodys Analytics. The deal may help about one million homeowners with an average debt reduction of $20,000.
The proposed settlement is “not going to be enough,” said Kathleen C. Engel, a law professor and a co-author of “The Subprime Virus.” She added that the deal was at least as good for the banks as for homeowners, if not better. “They could be hit with 50 different lawsuits from each of the states, for a lot more money,” she said.
I would add that underwater borrowers with a second lien, like a home equity line of credit, owe more like $84,000 on average. So this barely gets them back a quarter of their equity, and the second will probably remain untouched (because that’s on the bank’s books, usually, even though it’s worthless).
The Washington Post describes those opposed to the deal as activists. Those activists appear to include the Attorneys General of at least five states. They need to keep hearing from their local activists so they remain strong. The Administration and Tom Miller’s gang have a new deadline of February 6. Let’s hope they blow past it like they have every other one.




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But then again, someone said the ones that are still walking away with the big bonuses should pay……what about criminality, what about clawbacks….a Ponzi scheme is a Ponzi by any other name, said Mr Maddoff….this settlement will be paid for by shareholders and pension funds, the ole 5th amnedment Takings clause me thinks applies?
Barry Ridholtz is not impressed with this deal:
Click through for the justifications Barry lays out for these two statements.
To me, the whole dance over this deal brings to mind the health care reform deal. For Team Obama, what appears to matter most (both then and now) is not the content of the deal, but the fact that a deal got done. For people who are underwater, either for medical or housing-related problems, the content of the deal matters a great deal.
Providing $20K in relief to people who are $45-50K underwater may get them half-way back to the surface, but getting half-way back is not going to keep them from drowning.
They are really stumbling around with this thing. It’s so big and blatant, and so many more people are getting wise to it, that they cannot contain it. Thanks so much for your tireless efforts to inform the public about this, David.
DD really like the way you report this ongoing story. If the AG’s of several States are going to be labeled “activists” could you also label the “corporate media” like the Post in your reporting. It would be more accurate and balanced when reading about “us” vs. “them”.
When the banksters give CA $800 billion, then I will believe that they are serious. The US DoJ is corrupt and worthless in enforcing the laws against big corporations.
Team Obama’s only reason for pushing the deal is to give the banks immunity.
The rest is window dressing.
“…In fact, there’s more evidence here that the key AGs involved, who did not personally attend Monday’s session in Chicago with Shaun Donovan and other Administration officials, aren’t too keen on the terms…”
Tranlation: they haven’t been greased enough to cave. Yet.
The banksters have paid Obama a shitload of money to get this thing settled. What if he can’t close the deal? Will they dump him like a used tampax? Curious minds want to know.
That’ll happen about the time we get that money back from the energy companies…
My guess is that the deal has been struck, wink & nod behind closed doors, and this will happen in first week of second term.
Along with Keystone pipeline approval.
Doesn’t the US Attorney General have some kind of conflict of interest problem? Is that going anywhere?
Used tampax? Ouch.
If that’s the case, wouldn’t the Republican AGs use this as an opportunity to make that happen? It couldn’t happen to a nicer tampax.
This is just bribery as usual. Toss a few billion of shareholder money to the Feds in return for a get out of jail free card, and then give yourself a few million in bonus money for being so clever.
Welcome back from Moscow.
I am glad you are back.
Remind me never to piss you off.*g*
Thanks for clarifying that the $84,000 number comes from a small subset of the underwater homeowners –
just those “underwater borrowers with a second lien, like a home equity line of credit”
Of course even that limitation does not make it true as not even the Fed knows ALL who have, or does not have, second liens – so the number comes from a survey of a small data set put out by someone who does not want Homeowners to get a damn thing – they just want to stop the settlement and reward the hedge funds that caused this mess with 100% profits on their purchase of Mortgage backed securities last year.
The Fed number is $35,000 average underwater amount – $45,000 if you prefer Moodys Analytics work on a different data set – so the settlement is needed – and while I agree the size should be double what is on offer if NY and Cal are in it, the business news writer Susan (calling herself Yves) campaign against the settlement should not be seen as a reason to oppose it.
The San Francisco chronicle is calling the “bribe” $10 billion.
I urged her office not to take it, but to investigate, charge and prosecute.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/24/BU8F1MSCMT.DTL
Yves is right on many issues. Again, why the personal animus?
You come here everytime DDay does a post to slam her site.
I learn alot at that site, so this enquiring mind would like to know the reason for your constant putdowns.
My fear with Kamala Harris
Possibly, but there are others who want to stop the settlement to clear the way for criminal convictions.
Clapping loudly!
These Criminal Acts would have put a Average Person in Jail & ALL Assets Frozen,Fraudulent Activity through a Finicial System no matter WHO they are should have ceased once it came out & showned.They should have NOT been allowed to keep their Business opened.It’s like allowing a illegal Gambling Ring opened knowing it was Proforming Criminal Acts against the Public & it’s Finicial Systems.Fraudulent Activity like this Destroyed Housing Market & Familys.
@ghostof911
Possibly, but there are others who want to stop the settlement to clear the way for criminal convictions.
Tough for lawyers to get jobs out of schools these days, and alot of lawyers being laid of as firms consolidate….sure would
be a boost for certain AGs trial lawyer buddies who contribute to him, and forensic accountants ; )
I find the title to this post rather amusing. “Justice Democrats” is an oxymoron.
It’s always style over substance with our (s)elected criminals.
How about maybe, for once, we should just focus on whether crimes have been committed, and not investigated by a DOJ whose top leaders worked for the law firm that told the bankers they could legally switch to the MERS system, and lets not worry about whether other lawyers might EARN their fees for going after bad guys?
Lest we forget, it was Holder and his law firm that defended United Fruit’s employment of the paramilitary groups that murdered the union leaders in Colombia.
“The $8 billion is being dangled in front of Harris.” Harris could turn into the Mortgage Settlement’s version of Ben Nelson on the healthcare bill. Holdout and holdout and then get exactly what you want.
With Harris, I am curious as to how much value has her home lost (since her purchasing it)? Does anyone know?