I am not the author of today's catchy headline. No, that was Gretchen Morgenson writing in the New York Times on January 5, 2013.
If you were hoping that things might be different in 2013 — you know, that bankers would be held responsible for bad behavior or that the government might actually assist troubled homeowners — you can forget it. A settlement reportedly in the works with big banks will soon end a review into foreclosure abuses, and it means more of the same: no accountability for financial institutions and little help for borrowers.
Last week, The New York Times reported that regulators were close to settling with 14 banks whose foreclosure practices had ridden roughshod over borrowers and the rule of law. Although the deal has not been made official and its terms are as yet unknown, the initial report said borrowers who had lost their homes because of improprieties would receive a total of $3.75 billion in cash. An additional $6.25 billion would be put toward principal reduction for homeowners in distress.
Gretchen was reporting a few days before the official announcement. The deal was done, and the settlement turned out to be $8.5 billion, with $3.3 billion of that set aside for cash relief for homeowners.
The settlement Bank of America, Citigroup Inc, JPMorgan Chase & Co, Wells Fargo & Co and five other banks entered with regulators pays out up to $125,000 in cash to homeowners whose homes were being foreclosed when the paperwork problems emerged.
Remember that $125,000 number. That's pure propaganda, given the size of the group of aggrieved mortgage holders.
About $3.3 billion of the $8.5 billion settlement with the Office of the Comptroller of the Currency will be in cash, with the rest in changes to the terms of loans or mortgage forgiveness.
In April 2011, the government required banks that collect payments on mortgages, known as servicers, to review whether errors in the foreclosure process had harmed borrowers.
Gretchen did some "back of the envelope" math for us. I am too lazy to correct it for the lower cash settlement.
Some back-of-the-envelope arithmetic on this deal is your first clue that it is another gift to the banks. It’s not clear which borrowers will receive what money, but divvying up $3.75 billion among millions of people doesn’t amount to much per person. If, say, half of the 4.4 million borrowers were subject to foreclosure abuses, they would each receive less than $2,000, on average. If 10 percent of the 4.4 million were harmed, each would get roughly $8,500.
Gretchen then did a follow-up on January 12, 2013 called Paying the Price, but Often Deducting It, which I will not quote. She notes that these unimpressive settlements are usually tax-deductible for the banks.
And then FRONTLINE (PBS) ran yet another hour-long documentary about why no bankers have gone to jail. It's called The Untouchables, and contains this quote from Lanny Breuer, who has been the head of the Department of Justice's criminal division in the 1st Obama administraton, and who was still in that position when the documentary was made.
MARTIN SMITH — You gave a speech before the New York Bar Association. And in that speech, you made a reference to losing sleep at night, worrying about what a lawsuit might result in at a large financial institution.
LANNY BREUER — Right.
MARTIN SMITH — Is that really the job of a prosecutor, to worry about anything other than simply pursuing justice?
LANNY BREUER — Well, I think I am pursuing justice. And I think the entire responsibility of the department is to pursue justice. But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.
This is as candid a statement as you're ever going to read that the banks in question are considered too big to fail, and, as such, they are above the law. And now we learn that Lanny is resigning, having done his job to protect those banks, and having been exposed as a fraud.
Lanny Breuer is leaving his position as head of the Justice Department’s criminal division, The Washington Post reported Wednesday.
As assistant attorney general, Breuer led the effort to pursue allegations of fraud and corruption at major banks in the wake of the financial meltdown. The Post said it was unclear when Breuer will leave, and didn’t offer a reason. A DOJ spokeswoman told FRONTLINE that the department wouldn’t comment on the report.
Breuer was featured in FRONTLINE’s documentary The Untouchables, which aired on Tuesday and explored the reasons why no Wall Street executives have been prosecuted for fraud in connection with the financial crisis. Breuer told FRONTLINE that the DOJ had pursued charges when officials found evidence of fraud. “But in those cases where we can’t bring a criminal case — and federal criminal cases are hard to bring — I have to prove that you had the specific intent to defraud. …If we cannot establish that, then we can’t bring a criminal case,” he said.
And now I will make a few remarks.
I find it telling that humans, in this case Americans, continue to pretend that they live in a legitimate, fair society, despite massive and compelling evidence to the contrary. Or a society which—once again?—things might be set right. As usual, that observation tells us a lot more about humans (and Americans) than it does about the specific injustices and corruption in these pro-forma "prosecutions" of the banks, which are merely typical examples of how elites control complex human societies. As such, this kind of behavior is exactly what we would expect to see, independent of the messy details about how elite control is implemented.
As usual, if you research this particular manifestation of typical human corruption, of elite control, you will find much wailing and gnashing of teeth, for example, at places like Naked Capitalism.
I mean, why does FRONTLINE (video below) even bother to make these documentaries? So I'm here to ask disconcerted "progressives" and do-gooders some simple questions—
What the fuck did you expect to happen with the banks?
What is it, exactly, that you are complaining about?
Do you actually expect that this typical human corruption might be eradicated?
And there lies the dilemma, in the truest sense of the word.
Do we accept that crap happens and there ain't nothing we can do about it - 'it' being an inalienable aspect of Darwinian behavior?
Or do we stand up and make a fight of it, in any way we can muster - knowing that we are doubtless doomed to failure, 'it' being so endemic in human conduct?
Lose-lose... and yet, I return again and again to DOTE, reading your wisdom in the attempt to understand the crap that goes on. According to Einstein, this puts me among the ranks of the insane: ...doing the same thing over and over again but expecting different results.
Posted by: Oliver | 01/27/2013 at 11:15 AM