The Truth About the AG Mortgage Settlement...."Coming Soon"

The "settlement agreement" between state attorneys-general, the Obama Administration and five large banks over unlawful home foreclosures was front-page news everywhere this morning. Only one problem: you can't get a copy of the agreement itself.  All we have is a few hand picked details promising "relief" to defrauded borrowers, and pledges by the banks that they'll obey the law from now on.

Check out the special web site, which proudly trumpets the "landmark settlement," the "historic"agreement and the "landmark relief," but offers only a factsheet entitled "Servicing Standards Highlights" that purports to summarize the deal, and a bunch of phone numbers for the banks and the AGs.

Everything else is "coming soon."

This is an outrage, and frankly, the news media and all the rest of the pundits out there ought to have demanded the full and complete document before heralding the settlement as a major event. To my astonishment, most of the reports I read today failed to note that the actual settlement agreement has not been released to the public.

Ever heard of the lawyer's favorite maxim, "the devil's in the details"? The banks here were accused of failing to comply with legal technicalities like proving that they actually held the mortgage to the homes they foreclosed on.  When it comes to themselves, the bankers know those details matter: You can be sure that their lawyers have negotiated and reviewed every single comma. Shouldn't American taxpayers and homeowners, who have borne the terrible brunt of these banks' gross irresponsibility and greed for the last three years, had a chance to review the proposal before our elected officials signed on the dotted line?

I've seen this kind of stunt many times before - for example,  a settlement of a lawsuit that was described by the parties in a press release as returning $500 million in overcharges to insurance customers. Months later, the settlement agreement itself is quietly filed with the court, and surprise! You had to fill out a ten page claim form to get your money, and the insurance company got to keep whatever's left. (As a lawyer for one of the policyholders, I joined with Consumer Watchdog in an objection to the settlement.)

It is no little irony that many people lost their homes because they didn't read the fine print of the loans, or couldn't understand what it meant. But when it comes to the settlement of the fiasco, no one can read it even if they want to. We have nothing in print, fine or otherwise, beyond the press materials.

Remember you heard it first here: there'll be lots of surprises when we finally get to look at the details of this deal.

 

 

Foreclosure / Foreclosures / Harvey Column - 02/10/2012

Where’s Our Bailout? (Redux)

Between August 2007 and April 2010, the U.S. Federal Reserve handed out up to $1.2 trillion in public money to banks and other companies in the form of short-term loans to help them cope with cash flow problems, according to a recent report by the Bloomberg news service. In addition to U.S. banks and speculators, big bucks went to financial institutions owned by foreign governments; domestic firms like Ford and G.E. as well as Toyota and Mitsui and a German real estate investment firm.

While American taxpayers kept big businesses all over the planet alive, no such loans are available to taxpayers to cover their own personal cash-flow problems, including not being able to pay their mortgages, monthly bills, put food on their tables or a few holiday presents under the tree.

New figures, ironically also issued by the Federal Reserve, show how much help $1.2 trillion could be – if put in the hands of Americans. According to the Fed, the total amount of all money Americans owed on their credit cards as of last September was $693 billion. All of that could be paid off – in full – leaving another $500 billion, say, to help people avoid foreclosures or give every consumer in the United States a hefty tax cut.

Imagine the “stimulus effect” on our economy of paying off every credit card in the nation.

Although the Fed has portrayed the bailouts as the only way to keep money flowing in the economy, the Money Industry has yet to open its spigot and expand lending. Instead, they’ve used our dollars mostly to inflate CEOs’ executive salaries and pay themselves even more ridiculous bonuses.

Zeroing out America’s credit cards would solve that problem instantly. The credit card companies would get the money, of course, but Americans could start fresh and begin investing in their families, their businesses and their local economies.

Unfortunately, our country’s leadership owes its allegiance to the multi-national mega-corporations that grease the system with billions of dollars in campaign contributions. Wall Street’s “investment” in Washington caused the financial depression we are in today, and its no wonder that Washington’s attention is focused so narrowly on the welfare of the wealthy and large corporations. In fact, with its infamous decision equating corporations to human beings, the United States Supreme Court has turned the corruption of our democracy by money into a principle of our Constitution. Until we change that, Americans will be second class citizens in a country controlled by wealth and power.

 

Citizens United / Foreclosure / Harvey Column / Outrage / Supreme Court / TARP - 01/11/2012

"Apology Accepted, Captain Needa"

It’s not about “sorry” anymore.

Even before the Wall Street titans were sworn in last week, it appeared as if the goal of the Financial Crisis Inquiry Commission’s chair, Californian Phil Angelides, was to wring an apology from the men whose companies led the nation into an economic abyss. Whereas most Americans, let me venture, would like to wring their necks.

About twenty-five years ago, I wrote about “inseki jishoku,” the Japanese tradition of accepting responsibility for one’s actions and resigning one’s position as penitence. “These social balancing mechanisms are powerfully ingrained within the Japanese culture. In business activity, they create by necessity a ‘state of intimacy’ among management and employees,” William Ouchi, a management expert, told me at the time. I suggested that there would be less corporate crime in this country if American CEOs embraced a similar approach. 

That never happened.

So what would be the point of a symbolic apology from the titans of the Money Industry – assuming they would be willing to offer one (they tried hard not to, in the event)?

No amount of apology is going to salve the grievous wound in the American psyche as the banks’ profits and bonuses break records.

Like most Americans, I am having a hard time getting my head around how these companies can claim to be earning a “profit” and their executives billions of dollars in extra compensation after American taxpayers were forced to pitch in trillions of dollars to keep the companies afloat.

The truth is that they were able to get away with it because no one in Washington ever imposed any kind of quid pro quo for the bailout.

No cap on the exorbitant interest rates we now pay to borrow our own money from the credit card companies, for example.

No relief for people trying to keep up with their mortgages and pay the rest of the bills.

If symbolism is what this is all about, I say we’ve moved beyond the “apology” stage. How about sending some of these people to jail for twenty years? Or is it "legal" to destroy an economy and cost Americans their life savings and jobs? I had hoped the Angelides investigation would be the beginning of an intensive investigation that, like the Watergate hearings, would lead to holding people criminally accountable for their actions. Not so far, at least.

As I watched the politicians and the leaders of Goldman Sachs, Chase and Bank of America sashay around an apology at the witness table, it reminded me of a scene from the Empire Strikes Back. Han Solo and the Millenium Falcon have just managed to elude Darth Vader’s entire fleet of starships. Informed that Vader wants an update on the search, Captain Needa replies, “I shall assume full responsibility for losing them, and apologize to Lord Vader.”  Vader, using the Force, strangles him. “Apology accepted, Captain Needa.”

Executive Pay / Financial Crisis Inquiry Commission / Harvey Column - 01/18/2010

Attention Unhappy AIG Employees: Good Riddance

Looks like the top lawyer and other fat cats at AIG, whose salaries are now paid by American taxpayers, are maneuvering to be able to escape limits on their pay. Today’s Wall Street Journal reports that a Ms. Anastasia Kelly, the General Counsel of AIG, and four other insurance executives gave notice last week that they were “prepared” to leave by the end of the year if their pay is cut by Kenneth Feinberg, the government “pay czar” who sets compensation levels for companies that got bailout money. AIG got $182 billion in taxpayer dollars. AIG’s top employees want to bust the $500,000 pay cap set by Feinberg.

Harvey Column / Outrage - 12/07/2009