Ally Financial Inc., Bank of America Corp.,Citigroup Inc., J.P. Morgan Chase & Co., and Wells Fargo & Co. all agreed to a settlement to pay the US government up to $26 billion dollars for alleged foreclosure abuse.
"The Obama administration made a full-court press over the past four days to secure the support of key state attorneys general, including those from Florida, California and New York." Nothing like a little presidential persuasion to help one with overcoming one's conscience. Because in America the push to abrogate the very foundation of contractual agreements comes from the very top. But wait, there's more - just to wash its hands of the guilt associated with this settlement which shows once and for all that the Democratic administration panders as much if not more to the banking syndicate as any republican administration, as it announces one settlement with one hand, with the other the US will sue banks over the mortgage reps and warranties issue covered extensively here, in the most glaringly obtuse way to distract that it is gifting trillions worth of contingent liabilities right back to the banks, not to mention discarding the whole concept of justice. From the WSJ: "Federal securities regulators plan to warn several major banks that they intend to sue them over mortgage-related actions linked to the financial crisis, according to people familiar with the matter. The move would mark a stepped-up regulatory effort to hold Wall Street accountable for its sale of bonds linked to subprime mortgages in 2007 and 2008. At issue is whether the banks misrepresented the poor quality of loan pools they bundled and sold to investors, the people said." Wait, let us guess -that particular lawsuit will end up in a... settlement? Ding ding ding. We have a winner. All today's news succeed in doing is finally wrapping up any and all legal loose ends, so that banks can finally wrap all outstanding litigation overhangs at pennies on the dollar. And if at the end of the day, they find themselves cash strapped, why the US will simply loan them more cash of course.
Government officials are on the verge of an agreement worth as much as $25 billion with five major banks, capping a yearlong push to settle federal and state probes of alleged foreclosure abuses by lenders.
The deal would represent the largest government-industry settlement since a multistate deal with the tobacco industry in 1998.
The agreement covers five banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and Wells Fargo & Co. Together, the five handle payments on 55% of all outstanding home loans, or around 27 million mortgages, according to Inside Mortgage Finance.
These are the banks benefitting from Uncle Sam's decision to finally unclog the foreclosure pathway, as banks will no longer have to prove in court they are in fact the title owners.
But just in case popular outrage at this act is a little much, at the same time banks sued over fabricating Reps and Warranties will be: "Ally Financial Inc., Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc." What an odd coincidence: gift with one hand, and take away with the other from virtually all the same banks.
Only it is not really taking away: it is merely putting the wheels in motion that will ultimately result in the same type of settlement that will make a mockery of the legal process in the US, and expose all the state Attorneys General as banker puppets, doing the bidding of the highest bidder... and of Obama of course.
Problem is Democrats practically forced banks to make loans to people who couldn't pay them back. The banks then took these toxic loans, repackaged them and resold them over and over until they couldn't get any sucker to buy them.
The settlement covers foreclosures from September 08' to December 2011.
The end result is it allows Obama to buy a few cheap votes at $1200 to $2000 a pop.
All in all, just a day's work for the administration as it does everything in its power to push the housing market higher at all costs, and further and further away from equilibrium pricing, which is what should be for a true and normal price appreciation to occur... something which will never happen of course as it would take far longer than the 4 years allotted to the president. If the process entails bending the law beyond recognition, so be it.
Links
US To Settle Fraudclosure For $25 Billion Even As It Channels Fake Tough Guy In Meaningless Lawsuit Against Very Same Banks | ZeroHedge
U.S., Banks Agree on $26 Billion Foreclosure Pact - WSJ.com
What the Pact Means for Homeowners - WSJ.com