Q. What do you have with one hundred lawyers in a room?
A. Either a conspiracy to insure their own continued financial health or a scam against consumers.
Why, may you ask, am I suspicious of who will actually benefit from the $25 Billion mortgage settlement recently negotiated by a gaggle of lawyers, lobbyists and politicians in an important election cycle?
The Settlement …
U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced today that the federal government and 49 state attorneys general have reached a landmark $25 billion agreement with the nation's five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.
The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country. The joint federal-state group entered into the agreement with the nation's five largest mortgage servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly GMAC).
"This agreement--the largest joint federal-state settlement ever obtained--is the result of unprecedented coordination among enforcement agencies throughout the government," said Attorney General Holder." It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will ensure the abuses of the past are not repeated." Source: HUD Announcement
The reality is far different from the story being spun to the public …
It appears that approximately 5 Billion will be paid by the financial institutions, the rest being some lawyer-negotiated bamboozlement that shunts the real settlement costs to others.
And by others I do not mean …
the lawyers who should be in jail for defrauding the court and presenting documents every bit as fraudulent as liar loans;
the ratings agencies whose integrity was compromised by the dollars they were paid to render an honest opinion and who insured that restricted financial institutions, pension funds, insurance companies, and others were investing in worthless junk when the ratings said the were triple-A investment grade securities;
the credit repositories whose credit scoring models did not adjust for the fact that constant re-financing masked technical insolvency and a lack of credit capacity;
the Wall Street Wizards who created securities out of whole cloth, selling them among themselves to insure outrageous profits and bonuses;
the developers whose over-priced homes were discounted by credits, allowances and discounts although they reported the purported price instead of the real value;
the government’s regulatory and consumer protection agencies who had sufficient authority and legal reason to deter, detect and prosecute outright fraud;
or any of the others who conspired, calculated and condoned actions leading beyond the mortgage meltdown to the near collapse of our financial system.
I mean the honest, hard-working others who will eventually pick up the tab for the gross malfeasance of complicit lawyers, accountants, politicians and bankers who will walk away with their reputations intact and their fortunes secure.
Roughly translated, that means me and you – the taxpayers, the investors and the depositors who will earn less than the rate of inflation on investments which we were promised were made with prudent and sound business and banking practices. And who will pay higher taxes to cover the debts and expenses of those who seem immune to the consequences of their actions.
Pardon me while I vent …
Because if you read the fine print, you will find that approximately $5 billion is in the form of cash – from profits guaranteed by the Federal Reserve’s machinations and the lowered dividends and interest that is being paid to shareholders, investors and depositors.
The rest of the money will be “offset credits” earned by the banks Banks will earn “credits” -- a $1 credit for every dollar of principal they reduce in a loan they own outright and a 45-cent credit for every dollar written down on a securitized loan. And of course, they will get to choose the loans they modify, so you can be assured that it will be in the bank’s best interests to modify those specific loans.
There are so many loopholes in this “settlement” that the very financial institutions who signed-off on this legal abomination were actually be rewarded for their bad behavior.
If you can stomach approximately twelve-minutes of truth from Bloomberg Legal News, listen to how this settlement is being manipulated for political reasons.
Neil Barofsky, the straight-shooter who headed SIGTARP (Special Inspector General, Troubled Asset Relief Program) was quoted as saying that “"this would be comical if it wasn't so tragic".
Listen to the truth …
The Shocking Truth: Incentives not Penalties
On balance, the five financial institutions stand to profit from incentives rather than face punishment by sanctions and penalties. By some estimates, there could be more than $1.7 BILLION in benefits accruing to these miscreants who definitively broke the law, perpetrated a fraud upon the American legal system and screwed tens of thousands, if not hundreds of thousands, out of their hard-earned money and homes.
According to an analysis by the public interest journalism project ProPublica …
$1.4 billion: total direct payments from the settlement to homeowners who were wrongfully foreclosed upon between 2008 and 2011.
750,000: foreclosed homeowners expected to qualify with a $2,000: estimated average payout; even though there were 3.8 million total foreclosures between 2008 and 2011 and a 25 percent expected increase in foreclosures in 2012.
Read the actual ProPublica piece to see the extent of this scam that is being perpetrated on the citizens of the United States by lawyers, accountants, financiers and politicians.
Where are the sanctions and penalties on the other side?
Where is the contribution from the government for those regulatory and law enforcement agencies that simply failed to do their jobs to deter, detect, investigate and prosecute clear violations of existing law?
Where is the FBI and the other regulatory agencies? Sad to say, they are sitting in the same room with these financial miscreants and applauding this “historic” settlement.
Where are the findings against government lawyers who negotiated sweetheart settlements that charged companies with “record’ fines and penalties – but allowed the settlements to be made without admitting nor denying the allegations or criminally prosecuting those that actually committed fraud?
On each fraudulent foreclosure document set there is an attorney’s name, on each fraudulent loan there is a borrower’s name … so why are we not seeing actions being brought against those who did commit crimes and whose guilt can be easily established?
Obama and the media’s “historic” bullshit …
While President Barack Obama will be the historic “first Black President of the United States,” he also is the historic first affirmative action President – a man whose birth, background and credentials who have never been fully vetted in the non-partisan light of day. A man whose made history by being awarded a Nobel Peace Prize for zero accomplishment. A man whose historic achievements include nearly bankrupting the United States as he allowed “historic” levels of spending in his first term – more than all of the other Presidents combined.
So why should I not be surprised that one of Obama’s hand-picked minions, Shaun Donovan, the Secretary of the Department of Housing and Urban Development (HUD) announced the “Historic Mortgage Servicing Settlement.”
Bottom line …
This mortgage settlement agreement is part and parcel of a clear and present danger facing the United States. Our loss of Constitutional freedoms by allowing the subversion of property rights and contract law.
Obama and his wealth redistribution crowd are now allowed to re-write contract rights and to allow property rights to be affected by political power. They did it before in the General Motors Settlement which upended long-standing contract law and made a mockery of property rights. And they are doing it again now.
There is absolutely no doubt in my mind that Obama and his corrupt democrat cronies should be purged from the system – if not prosecuted for their complicity in the felonious manipulation of the capital markets for political advantage involving the unions and other special interests.
We need to depoliticize the nation’s regulatory agencies. Starting with the hyper-politicized Consumer Financial Protection Bureau which now appears to be a political power grab by the Obama Administration.
People, you must get out and vote. Lest you find you property rights, your legal rights gone under the Marxist scheme of wealth redistribution and totalitarian manipulation of your life.
Reference Links …
"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius