The Mortgage Settlement: More Jokes

The Big Five Banks received another love tap from the Federal Reserve just a few day after the 49 state mortgage settlement was announced. They were fined a mere $766.5 million on February 9, 2012.  The release of documents also revealed this:

NOW, THEREFORE, before the filing of any notices, or taking of any testimony or adjudication of or finding on any issues of fact or law herein, and without this Consent Assessment Order constituting an admission by (bank) of any allegation made or implied by the Board of Governors in connection with this matter, and solely for the purpose of settling this matter without a formal proceeding being filed and without the necessity for protracted or extended hearings or testimony, it is hereby ORDERED by the Board of Governors…”

In other words not only was the fine piteously low considering the amount of equity that was lost by the victims through fraud, the banks don’t have to even admit that they committed a crime.

The other joke is the National Mortgage Settlement website. Remember David Dayen at FDL questioned why the site was a .com and not a .gov well the Department of Justice slapped a disclaimer on the site.

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And Richard (RJ) Eskow takes to task Edward J. DeMarco. He is the Bush holder-over head of the Federal Housing Finance Agency (FHFA) which overseas Freddie Mac and Fannie Mae. DeMarco is refusing to issue principal reductions, negotiate lower interest rates, push refinancing deals through the system that would dramatically reduce foreclosures. It would do far more than last week’s settlement deal can ever hope to accomplish and without Congressional approval. It only requires the stroke of its DeMarco’s pen. Fannie and Freddie, which taxpayers repurchased and bailed out after they were destroyed by ‘privatized’ mismanagement and Wall Street greed, hold more than half the mortgages in the country.

De Marco refuses to carry out his agency’s assignment for ideological reasons. The Defense Department’s mission is to protect the American people from attack, and the FHFA’s mission is to protect American homeowners – and in so doing, help the economy as well.

But instead of making it easier for homeowners to get relief, De Marco and his lieutenants are making it harder. Outrageously, they’re even paying a financial manipulator millions in taxpayer money to bet billions against the same homeowners.They’re betting that these homeowners can’t refinance, while at the same time making it harder for the to do it..[..]

As a letter from Reps. Elijah Cummings and John Tierney reveals, a former FHFA employee testified that there was a pilot program in principal reduction but “was terminated by senior officials at Fannie Mae who were ‘philosophically opposed’ to the concept of reducing principal.”

The more these homeowners lose out, the more money the financial guy makes. [..]

DeMarco didn’t reveal the existence of this program or its termination in his Congressional testimony. He also misled Congress and the public when he said that principal forgiveness for all (underwater) mortgages would cost “almost $100 billion,” since $100 billion is the estimated total of all underwater principal, not just the amount that would be reduced for distressed homeowners.

Another FHFA study showed that not reducing principal on these mortgages would cost more than $100 billion, as Cummings and Tierney noted, while yet another showed that a well-designed principal reduction program would actually save taxpayers $28 billion.

DeMarco didn’t mention those studies, either. [..]

DeMarco defends his unwillingness to carry out his duties by claiming that principal reductions for underwater homeowners – some of whom are still paying seven percent interest or more for nonexistent home value, when the prevailing rate is as much as three points lower – “would not meet (the FHFA’s) responsibilities as conservator of Fannie and Freddie.” He told Congress that “FHFA has a statutory responsibility to preserve and conserve the enterprises’ assets.”

What agency on Earth has a greater responsibility to not spend money serving its purpose than it does to do its job? It seems absurd, doesn’t it? DeMarco’s suggesting that not doing anything is a greater obligation for his agency than carrying out the function for which it was created.

And President Obama is stuck with this right wing banker crony because Congress won’t confirm Obama’s nominee and he can’t be fired because the FHFA is an independent agency. At least that’s the claim by the White House and DeMarco.

Read the rest Eskow’s article, it will leave you head shaking.

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    • on 02/15/2012 at 16:47

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