Tag: Economy

Along with the Foreclosure Settlement documents it was agreed that the Housing and Urban Development Inspector General report was also released. The New York Times review of the report noted that, contrary to the denial by the banks, top bank managers were responsible for the criminal conduct:

   Managers at major banks ignored widespread errors in the foreclosure process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections, according to a wide-ranging review by federal investigators.

   The banks have largely focused the blame for mistakes on low-level employees, attributing many of the problems to the surge in the volume of foreclosures after the housing market collapsed and the economy weakened in 2008.

   But the report concludes that managers were aware of the problems and did nothing to correct them. The shortcuts were directed by managers in some cases, according to the report, which is by the inspector general of the Department of Housing and Urban Development […]

   “I believe the reports we just released will leave the reader asking one question – how could so many people have participated in this misconduct?” David Montoya, the inspector general of the housing department, said in a statement. “The answer – simple greed.”

Ben Hallman at The Huffington Post observed that the report fell short because of stonewalling by the banks lawyers who blocked interviews with but a handful of employees:

Though the report describes a pattern of misconduct that appears widespread, it fails to quantify the damage to homeowners or, ultimately, how many home loans were affected. It also clearly reflects the frustration that investigators felt in conducting the review. Even as negotiators for the banks were fighting to win the best possible deal, their lawyers were stonewalling other government investigators trying to ascertain the scope of the “robo-signing” abuses.

Wells Fargo provided a list of 14 affidavit signers and notaries — but then stalled while the bank’s own attorneys interviewed them first. The bank then tried to restrict access to just five of those employees. The reason? “Wells Fargo told us we could not interview the others because they had reported questionable affidavit signing or notarizing practices when it interviewed them,” the report says. [..]

Bank of America only permitted its employees to be interviewed after the Department of Justice intervened and compelled the testimony through a civil investigation demand. Even so, the review was hindered, the report says.  [..]

The investigation into Citigroup’s mortgage division was “significantly hindered” by the bank’s lack of records. Citigroup simply did not have a mechanism for tracking how many foreclosure documents were signed.

Both JPMorgan Chase and Ally Financial refused to provide access to some employees or documents or otherwise impeded the investigation, according to the report.

Hallman also noted some of what was uncovered by investigators:

Wells Fargo employees testified that they signed up to 600 documents a day without attempting to verify whether any of the information was correct. [..] The bank also relied on low-paid, unskilled workers to do the reviews: a former pizza restaurant worker, department store cashier, and a daycare worker, to name a few.

A vice president at Bank of America testified that she only checked foreclosure documents for formatting and spelling errors. Employees in India supposedly verified judgment figures in foreclosure documents, but none of the U.S. employees interviewed by the inspector general could explain how that process was supposed to work. One former employee described signing 12 to 18 inch stacks of documents without review.

Employees at Wells Fargo and Bank of America testified that they complained about the pace and lack of care given to reviews, but instead of relief, were told to sign even faster. One Bank of America notary said his target was set at 75 to 80 documents an hour, and he was evaluated on whether he met that target. One notary even notarized her own signature on a few documents.

Abuses at the other banks — JPMorgan Chase, Citigroup and Ally Financial — appear just as pervasive. Citi, for example, routinely hired law firms that “robo-signed” documents. An exhibit included with the report shows eight different versions of one attorney’s signature — all apparently signed by different people.

In signing off on this 49 state agreement the banks did not have to admit to any wrongdoing despite the damning evidence of fraud that was directed by top management. No other sanctions beyond a few billion dollars and certainly no criminal prosecutions. If I were Bernie Madoff, I’d be really pissed.

The Foreclosure Fraud Settlement documents were filed in federal court and released to the public. There is a lot to wade through but the intrepid David Dayen at FDL News Desk breaks them down in a series of four articles that highlight just how easy these banks are getting off and what they are getting away with. Some of it will really make your blood boil:

Foreclosure Fraud Settlement Docs (I): Ally’s Side Deal

What accounts for this? Probably this little nugget buried in a Reuters article on the settlement:

  Some banks negotiated separate requirements.

   Ally Financial, for example, negotiated a steep discount on the fine part of its settlement, based on an inability to pay it, according to people familiar with the matter.

   It was expected to pay some $250 million, but the Justice Department cut it to around $110 million, these people said.

   In exchange, it committed to solicit all borrowers in its own loan portfolios and to offer to cut principal for delinquent borrowers down to 105 percent of the home’s value. It also offered to refinance underwater borrowers who are current on their payments.

Gee, I didn’t know that federal and state civil penalties had a “pay what you can” quality to them. [..]

About those state funds: there is nothing to stop state AGs from using them in any way they see fit. Note the weasel words in this language (which I’ve bolded):

Each State Attorney General shall designate the uses of the funds set forth in the attached Exhibit B-1. To the extent practicable, such funds shall be used for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and prosecute financial fraud, or unfair or deceptive acts or practices and to compensate the States for costs resulting from the alleged unlawful conduct of the Defendants.

   No more than ten percent of the aggregate amount paid to the State Parties under this paragraph 1(b) may be designated as a civil penalty, fine, or similar payment. The remainder of the payments is intended to remediate the harms to the States and their communities resulting from the alleged unlawful conduct of the Defendant and to facilitate the implementation of the Borrower Payment Fund and consumer relief.

You have that strong word “shall” competing with “to the extent practicable.” And indeed, several states have already made clear that they will be diverting much of the settlement into their state budgets. More make it clear in the settlement docs, more on that later.

Foreclosure Fraud Settlement Docs (II): Giving Homes to Charity as a Penalty

Another part of the document explains that any modification under any government housing program can qualify under the settlement credits:

   Eligible modifications include any modification that is made on or after Servicer’s Start Date, including:

   i. Write-offs made to allow for refinancing under the FHA Short Refinance Program;

   ii. Modifications under the Making Home Affordable Program (including the Home Affordable Modification Program (“HAMP”) Tier 1 or Tier 2) or the Housing Finance Agency Hardest Hit Fund (“HFA Hardest Hit Fund”) (or any other federal program) where principal is forgiven, except to the extent that state or federal funds paid to Servicer in its capacity as an investor are the source of a Servicer’s credit claim.

   iii. Modifications under other proprietary or other government modification programs, provided that such modifications meet the guidelines set forth herein.

Presumably those programs weren’t all going to shut down. So banks doing what they’ve been doing, meeting the minimum requirements of those other programs, will help them complete the settlement requirements.

Foreclosure Fraud Settlement Docs (III): “Internal Review Group”

Page E-3 details the “internal review group”:

   Servicer will designate an internal quality control group that is independent from the line of business whose performance is being measured (the “Internal Review Group”) to perform compliance reviews each calendar quarter (“Quarter”) in accordance with the terms and conditions of the Work Plan (the “Compliance Reviews”) and satisfaction of the Consumer Relief Requirements after the (A) end of each calendar year (and, in the discretion of the Servicer, any Quarter) and (B) earlier of the Servicer assertion that it has satisfied its obligations thereunder and the third anniversary of the Start Date (the “Satisfaction Review”). For the purposes of this provision, a group that is independent from the line of business shall be one that does not perform operational work on mortgage servicing, and ultimately reports to a Chief Risk Officer, Chief Audit Executive, Chief Compliance Officer, or another employee or manager who has no direct operational responsibility for mortgage servicing.

So the bank can take their own employees out of another part of the bank and have them conduct a quarterly review, which then gets passed to the monitors and becomes the initial basis for enforcement. Even if you believe these will be “independent” internal reviews, we’ve seen with the OCC foreclosure reviews that those independent reviewers paid for and hired by the banks typically write bank-friendly reports. In fact, a later note indicates that “The Internal Review Group may include non-employee consultants or contractors working at Servicer’s direction.”

Foreclosure Fraud Settlement Docs (IV): Association of Mortgage Investors Planning to Challenge in Court

At any rate, if there’s one group who does not agree with HUD that investors won’t end up footing the bill for a substantial portion of the settlement, it’s… the Association of Mortgage Investors. The trade group representing investors in mortgage-backed securities fully believes they will be on the hook for losses, and so they will challenge the settlement in federal court.

   As the federal court reviews the final settlement, AMI asks that the following changes be made on behalf of all investors:

   Transparency. The NPV (net present value) model incorporated into the settlement must consider all of a borrower’s debts, be national in scope, transparent, and publicly disclosed; the NPV model must be developed by an independent third-party. An incorrect NPV model likely will lead to further re-defaults and further harm distressed homeowners.

   Monetary Cap to Protect Public Institutions. As intended, the settlement causes financial loss to the abusers (the bank servicers and their affiliates). Unfortunately, the settlement is expected to also draw billions of dollars from those not a party to the settlement, including public institutions, unions, and individual investors. It places first and second lien priority in conflict with its original construct thereby increasing future homeowner mortgage credit costs. It is unfair to settle claims against the robosigners with other people’s funds. While we request that it not be done, at a minimum we request that a meaningful cap be placed on the dollar amount of the settlement satisfied by innocent parties. Again, restitution should come from those who are settling these claims, and

   Public Reporting. We ask that the settlement Administrator be required to make reports public and available on a monthly basis, reporting progress on clearly defined benchmarks and detailing on both a dollar and percentage basis whether the mortgages modified are owned by the mortgage servicers or the general public.

Over at naked capitalism, Yves Smith points out The Legal Lie at the Heart of the $8.5 Billion Bank of America and Federal/State Mortgage Settlements

HUD Secretary Donovan, the propagandist in chief for the Federal/state mortgage pact, has claimed he has investor approval to do the mortgage modifications that are a significant portion of the value of the settlement. We’ll eventually see what is actually in the settlement, but the early PR was that “no less than $10 billion” of the $25 billion headline total was to come from principal reductions. Modifications of mortgages not owned by banks, meaning in securitized trusts, are counted only 50% and before Donovan realized he was committing a faux pas, he said he expected 85% of the mods to be from securitizations, so that means $17 billion. [..]

But what about this investor approval that Donovan says he has? He has told both journalists and mortgage investors directly that the bulk of the mods will come from Countrywide deals and he has consent via the $8.5 billion Bank of America/Bank of New York settlement. Huh? First, it seems more that a bit cheeky to rely on a major piece of a program via a deal that has not yet gone through (the Bank of America settlement was removed to Federal court and has now been sent back to state court, and there will be discovery in the state court process, so approval is not imminent).

But second and more important, investors approved nothing. Bank of New York is trying to act well outside its authority as trustee for the 530 Countrywide trusts in the settlement. It’s tantamount to having a friend that you gave a medical power of attorney claim that it gave him the authority to sell your car and write checks on your account.

The terms of Countrywide PSAs vary, but all appear to restrict mods. The prohibitions varied by credit quality of the deal. Alt-A and early vintage (2004 and earlier) deals often barred mods completely; subprime and later vintage deals generally allowed for a higher limit on mods, with 5% the top amount across these deals. The idea was that some mods were expected in the dreckier mortgage pools. Nevertheless, all of them, as well as the few that had no caps, also required Bank of America to buy the modified loans back at par. That is something the battered Charlotte bank would be very keen to avoid doing.

This comment by Synoia sums it all up pretty nicely:

The Banks won’t be held accountable

The Banks won’t fix their past behavior

The Banks won’t change their behavior

The Banks won’t stop bribing our politicians

The Banks won’t stop gouging consumers

The Banks won’t tell the truth about any facet of their business

The Banks won’t stop taking enormous risks with other people’s money

The Banks won’t stop paying their worthless executives too much money

Need one continue?

And this settlement won’t change a thing.

Thank you, President Obama

Wages have not matched inflation, unemployment for those without work for more than six months is topping 40% while real unemployment (U-6) sits at 14.9%, the housing market continues to tumble. The cost of housing, food, health care, education, transportation has gone up while wages have gone in the other direction.

That is the reality of the US economy and it does not bode well for a sustainable recovery, not without a boost from the government. Nobel Economist Joseph E. Stiglitz writes that “the labor market is a shambles” and it’s not going to improve anytime soon without a boost from the government:

Let’s assume that job creation continues at the rate of 225,000 jobs a month. That is only about 100,000 beyond the number required to provide jobs for the average monthly number of new entrants into the labour force. At that pace, it would take 150 months to reach full employment – 13 years, some time around 2025. The independent Congressional Budget Office is more optimistic, forecasting the return of full employment by 2018. [..]

Before the crisis, 40 per cent of all investment was in property. We had a housing bubble that left a legacy of excess capacity. Continuing weakness in the property sector is reflected in high foreclosure rates and low home prices. [..]

Finally, US states and local governments are constrained, to a large extent, by having to balance their budgets. They depend heavily on property taxes, so both revenues and expenditures have plummeted. This is why there are a million fewer public employees than before the crisis. Government as a whole is being procyclical, not countercyclical. [..]

Unfortunately, little has been done about the underlying structural problems. Indeed, the downturn, during which wages have not kept pace with inflation, has in many ways made US inequality worse.

Today the American economy faces three big risks. First, a steeper European downturn, as a result of the excessive austerity and the euro crisis. Second, complacency that the economy will recover quickly without government support. Though every downturn comes to an end, that should not be of much comfort. Third, that we accept that an unemployment rate above 7 per cent is inevitable.

If my Cassandra forecast turns out to be wrong, stimulus can be cut. But if it turns out to be right, and we do too little, we will live to regret it.

We need Congress and the President to stop listening to “Washington Consensus” and the “main stream” economists that are preaching “austerity” that will only prolong the economic decline and increase poverty.

The Asia markets rose this morning after the news that Greece has reached a settlement with at least 90% of its bond holders:

The finance ministry said 85.8 percent of its 177 billion euros in bonds regulated under Greek law had been tendered, adding that the rate would reach 95.7 percent with the use of collective action clauses to enforce the deal on creditors who refused to take part voluntarily.

The result should clear the way for the European Union and International Monetary Fund to release a 130 billion euro bailout package agreed with Greece last month. [..]

The biggest sovereign debt restructuring in history will see bond holders accept losses of some 74 percent on the value of their investments in a deal that will cut more than 100 billion euros from Greece’s crippling public debt.

The unknown consequence of this agreement is that it may trigger the credit default swap (CDS) insurance that some investors hold on the bonds. Some economists don’t believe that this would be a problem:

Finance ministers from the 16 other countries that use the euro are to discuss the deal’s results in a conference call later Friday. The International Swaps and Derivatives Association said it would also meet to determine whether the deal would be deemed a so-called “credit event” – a technical default – which would trigger the payment of credit default swaps, which is essentially insurance against a default.

When the debt relief plan was first announced last year, eurozone leaders and the ECB worked hard to avoid a credit event, because they feared the a payout of CDS could destabilize big financial institutions that sold them.

However, since then a CDS payout has started to look less threatening. The ISDA, a private organization that decides on credit events, said that if they are triggered, overall payouts on CDS linked to Greece will be below $3.2 billion. That amount is spread over many financial firms and likely too small to significantly hurt any one of them.

However, the outlook for economic growth anytime soon is grim. The problems that have been inflicted on the average Greek citizen by the austerity measures of this deal still exist and it’s predicted, the situation for them will not be improving for years:

   It’s stunning here in Athens to see many traffic lights not working, to see beggars pawing through garbage for food, to see blackened ruins of shops burned in rioting. I was even greeted by a homeless man who spoke impeccable British-accented English.

   That man, Michael A. Kambouroglou, 35, claims that he studied English literature at Cambridge University and worked for years in the tourism industry, most recently at a five-star hotel. He told me that he had enjoyed a good life, visiting the United States and traveling around the world, until the day nearly a year ago when the collapsing economy caught up with him, and he was laid off.

   “To be honest, I never thought it could come to me,” he recalled. “It happened in a flash.” Kambouroglou says he goes out every morning, knocking on doors and looking for work, but in this economy it seems hopeless. The overall unemployment rate here is 21 percent – 48 percent among young people – and the European Union forecasts that the Greek economy (and all of the euro zone) will shrink further this year.

Without economic growth, the deal may only be buying a little time before it all goes back to square one. There are those who believe that this is just stalling the inevitable default and that the sooner Greece defaults the faster the pain for the Greek people will be relived:

Greece has defaulted five times since 1800, most recently in 1932.

Clearly, Greek’s own experiences reveal there is, indeed, life after default. So what’s the country waiting for?

Well, if its leaders are afraid a default won’t be tolerated in modern times, they need to consider the most recent examples set by Russia and Argentina…

In 1998, Russia defaulted on $40 billion in local debt. Within two years, its economy was growing by double-digit rates. And it continued to do so for the better part of a decade under Vladimir Putin’s leadership.

In late 2001, Argentina defaulted on $95 billion in debt. Yet, by the end of 2002, its economy returned to growth. And it continued growing for eight straight years. [..]

Bottom line: As Howard Davies, a former U.K. central banker and financial regulator, says, “It’s too late for Greece [to avoid default].” So let’s pull off the Band-Aid already and get it over with.

It won’t be painless or even remotely enjoyable. But it’s necessary if Greece ever wants to get its financial house in order and its economy growing again.

It is almost inevitable that Greece will default but in the interim the Eurozone leaders are determined to force more austerity on the country in order to protect the hedge funds profits at the expense of the Greek people. Is America headed down this same road?

Freedom Rider: Greece: Your Money or Your Life

By Margaret Kimberly, editor and senior columnist at the Black Agenda Report

Greece is at the epicenter of an horrific assault on working people and on their democracy. As a result of corruption at the top of the Greek government and world wide finance capital, that nation is teetering on the brink of insolvency. The rescue cooked up by the same people who created the problem is in fact anything but.

The so-called bail out is a plan to destroy the last vestiges of the welfare state and the expectations of humanity that they can have any hope of being treated fairly in capitalist countries. The European Central Bank, the International Monetary Fund and the European Commission have descended like vultures, making it crystal clear where their interests lie. [..]

Beginning in 2008, Americans got a dose of some of the same medicine. We were told that our economy would implode if we didn’t give our money to bail out the very same banks which created the crisis. Four years and trillions of dollars later, we are still in a recession, unemployment remains high, ordinary people have lost their assets and our president and Congress bicker over how much they can cut government spending and ruin our lives even more.

The Greeks are ahead of the curve. At least they stood up and protested. Hopefully more people around the world will be like them instead of like passive Americans. Hopefully Americans will stop being passive before they end up like people in Greece.

The Greek Experiment

Michael Hudson: Greek crisis used to find out how far finance can drive down wages and privatize.”

Michael Hudson is a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971).

Greece is being forced out of eurozone, Venizelos claims

by Ian Traynor in Brussels and Larry Elliott of The Guardain UK

Greek finance minister says troika is shifting terms of €130bn bailout deal as part of move to force country out of eurozone

Greece rounded bitterly on its EU paymasters when the finance minister and socialist leader, Evangelos Venizelos, accused the eurozone of deliberately changing the terms of a proposed €130bn (£110bn) bailout because key players wanted to kick the country out of the single currency.

The charge that some eurozone countries were seeking to engineer a Greek sovereign default and exit from the euro deepened the rancour between debtor and creditors in the dangerous standoff.”There are many in the eurozone who don’t want us any more,” Venizelos declared at a meeting with President Karolos Papoulias. “We are constantly being given new terms and conditions.”

Papoulias went even further, denouncing Germany and Greece’s north European creditors after Wolfgang Schäuble, the German finance minister, said that Greece must not turn into a “bottomless pit” for eurozone bailout funds and that Europe was better prepared than when the crisis erupted two years ago to cope with a Greek sovereign default. [..]

Venizelos claimed the crucial debt swap with the banks – which technically requires three weeks to organise – will be announced on Monday provided the eurogroup signs off on the bailout.

The accord has to be in force well before 20 March when Greece is due to redeem €14.5bn of debt or face default.

ATHENS – After violent protests left dozens of buildings aflame in Athens, the Greek Parliament voted early on Monday to approve a package of harsh austerity measures demanded by the country’s foreign lenders in exchange for new loans to keep Greece from defaulting on its debt.

Though it came after days of intense debate and the resignation of several ministers in protest, in the end the vote on the austerity measures was not close: 199 in favor and 74 opposed, with 27 abstentions or blank ballots. The Parliament also gave the government the authority to sign a new loan agreement with the foreign lenders and approve a broader arrangement to reduce the amount Greece must repay to its bondholders.  [..]

But the chaos on the streets of Athens, where more than 80,000 people turned out to protest on Sunday, and in other cities across Greece reflected a growing dread – certainly among Greeks, but also among economists and perhaps even European officials – that the sharp belt-tightening and the bailout money it brings will still not be enough to keep the count

The killing of Greece

By Delusional Economics

What makes the situation completely surreal are the numbers. Greek debt in 2008 was approximately 260bn Euro. The first bailout was 110bn, the current one, that appears to be tearing the country apart, is 130bn. Add in the PSI+ haircut of approximately 100bn ( after sweetener deduction ) and you realized that Europe could have simply paid the entire bill in 2008 and saved itself 80bn Euro. Ok, that is an oversimplification of the problem but you can see my point.

However now, after 340bn Euros, Greece is still has an unmanageable debt, is in a far worse position than it was 3 years ago and it appears the country itself is coming apart at the seams.

So basically the Greek politicians and the other Eurocrats took a quarter of a billion euro problem and turned it into a existential trillion Euro one. Worst still their refusal to work cooperatively and misguided policies based around “expansionary fiscal contraction” have plunged Greece into a depression which threatens contagion to other weak economies. Yet at this point I can see absolutely no data suggesting the country is in any way more competitive than it was 3 years ago.

Greece – A Default is Better Than the Deal on Offer

By Marshall Auerback

Pick your poison. In the words of Greek Finance Minister Evangelos Venizelos, the choice facing Greece today in the wake of its deal with the so-called “Troika” (the ECB, IMF, and EU) is “to choose between difficult decisions and decisions even more difficult. We unfortunately have to choose between sacrifice and even greater sacrifices in incomparably more dearly.” Of course, Venizelos implied that failure to accept the latest offer by the Troika is the lesser of two sacrifices. And the markets appeared to agree, selling off on news that the deal struck between the two parties was coming unstuck after weeks of building up expectations of an imminent conclusion.

In our view, the market’s judgment is wrong: an outright default might ultimately prove the better tonic for both Greece and the euro zone.

The only questions that remain to be resolved are these: have all of the parties begun preparations to mitigate the ultimate impact of an outright default by Athens? And will the ECB be sufficiently aggressive in combating the inevitable speculative attacks on the other members of the euro zone periphery, which are almost certain to ensue, once Greece is “resolved” one way or the other.

Greek Bailout Deal, With More Austerity, Poised to Pass Parliament Amid Riots

I’m curious what record unemployment and poverty, bonfires and 100,000 protesters in front of Parliament is, then, if not uncontrollable economic chaos and a social explosion. And Papademos added, strangely, that the deal would allow Greece to return to economic growth in late 2013. I don’t know where this claim was pulled from. Austerity has only brought a deeper recession – and a higher debt-to-GDP ratio – thus far.

About 20 members of the coalition of parties – which control 236 of the 300 seats in Parliament – said they would not agree to the deal. But this leaves a healthy cushion for success. Three members of the Socialists resigned from their party after the bailout terms were announced.

European finance ministers would not agree to bailout terms until Greece passed them first in the Parliament, as they have run out of patience with the Greek’s ability to abide by prior deals. The deal would pave the way for a work-out with Greece’s creditors that would include a nearly 70% haircut on existing debt. European leaders hope this will be seen as a “voluntary” reduction and not a default event that would trigger credit default swaps, but leading rating agencies have already said they won’t see it that way.

Yes, this is a mess with wide ranging global impact.

There is still no agreement on bailing out Greece as Greek Premier Lucas Papademos failed to get his government’s coalition parties to agree to the severe austerity terms set out by the European Commission, European Central Bank and International Monetary Fund:

After five hours of discussions, the three leaders of Greece’s national unity government had not accepted demands by international lenders for immediate deep spending cuts and labour market reforms as part of a new medium-term package.

Mr Papademos said the political leaders had agreed on some “basic issues”, including making spending cuts this year of 1.5 percentage points of gross domestic product, or about €3bn, according to a statement from his office. [..]

The talks with the three leaders of a national unity government came after the government failed to persuade the so-called “troika”- representatives of the European Commission, European Central Bank and International Monetary Fund – to ease conditions for the rescue deal.

Patience with Greek politicians has evaporated among its creditors. During a conference call on Saturday, eurozone finance ministers bluntly told Athens to deliver on its promises and agree to reforms or face default next month.

David Dayen at FDL News Desk points out that the Greeks are being asked to destroy themselves for a bailout and calls the terms “insane”:

The deal calls for Greece to run a primary budget surplus (not counting interest payments on debt) in 2013 of over 2% of GDP, rising to over 4% by 2014. That implies massive cuts to public spending in the middle of a 5-year recession, if not a depression. As Antonis Samaras, leader of the New Democracy Party, told the Financial Times, “They’re asking for more recession than the country can take.” Samaras also has highlighted that the troika seeks cuts in private sector wages as part of the deal, of up to 25%. There would also be a 35% cut in supplementary pensions.

Trying to pressure for a settlement that many Greek leaders feel would damage the Greek economy and prolong the five year Greek recession, French President Nicholas Sarkozy and German Chancellor Andrea Merkel issued statements and made a proposal that would reassure creditors:

Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, also proposed that a special closed account be created for the interest due on Greek debt to reassure creditors that they would be paid.

“The situation of Greece has to be fixed once and for all,” Mr Sarkozy said after the two leaders met in Paris. He said the terms of a bail-out deal were “on the table” and called on all the main political leaders urgently to back them, adding “time is running out”.

“Our Greek friends must take responsibility and vote for the reforms to which they are committed. This concerns everybody – the prime minister, the leader of the socialist party and the leader of the [centre-right] New Democracy party.”

Ms Merkel added: “We want Greece to stay in the euro … but I also say there can be no new Greek programme if agreement is not reached with the troika [European Commission, European Central Bank and International Monetary Fund]. All those who bear responsibility in Greece must know we will not deviate from this position.”

She added: “Time is running short. A lot is at stake for the entire eurozone.”

The stalemate had its effect on stock markets today with US stocks taking a dip

The three major U.S. stock market indices retreated slightly on Monday as investors continued to await the outcome of a potential Greek sovereign debt deal with private creditors. At 2:30pm Eastern Time, the Dow Jones Industrial Average (DJIA) had lost 40 points, or 0.3 percent, to 12,822 while the NASDAQ Composite had backed down 0.2 percent to 2,899. Meanwhile, the S&P 500 was down 0.2% to 1,342 points.

The austerity measures have already caused a 6% drop in the GDP which increases the debt to GDP ratio. the last thing Greece needs, or for that matter Europe,is more austerity.

Nothing is as it seems and all the optimism about how the mortgage settlement with the banks was about to be sealed with a kiss turns about to be premature. With a deadline of February 3 for states to declare whether they are joining the settlement, some major questions have been raised about just what the definition of “narrow” is for the Obama administration.

From Yves Smith at naked capitalism.

Yet More Mortgage Settlement Lies: Release Looks Broad, Not Narrow; Other States Screwed to Bribe California to Join

While there is every reason to believe there has been some improvement in terms due to the resistance of Schneiderman and other state attorneys general (Beau Biden of Delaware, Martha Coakley of Massachusetts, Catherine Cortez Masto of Nevada, and Kamala Harris of California), the notion that, per Mike Lux, “the settlement release is tight” appears to be patently false.

Since there has yet to be any disclosure of the draft terms, we can’t be certain, but a reading of a letter sent by Nevada’s Masto gives plenty of cause for pause. Reaching inferences from her 38 questions is a Plato’s cave exercise, but some of the items seem pretty clear. [..]

Yves explains the concerns that the banks would be released of liability of not just robosigning but chain of title securitizations and origination issues. She then get to the latter from Nevada Attorney General Catherine Cortez Masto who submitted a letter to settlement negotiators

Most of her queries are sufficiently technical so as to make it hard to guess with any certainty as to what the language of the agreement might be, but two questions at the top stood out:

This certainly looks as if Masto sees the origination release as broad. Asking for an itemization of what is NOT included suggests a lot seems to be included.

But this is the whopper:

From early on, we have stressed that this is a cash for release deal, and this looks like a VERY big release. The banks will pay an amount into the fund, and all issues relating to robo-signing and foreclosure will be released by the AGs: the banks will have a state level release from all bad assignment/transfer issues. [..]

Remember, bank executives piously swore in 2010 that they stopped robosigning, yet their firms continue to engage in that practice.

Then there is the matter of trying to bribe California’s AG Kamala Harris back into the fold by giving California 60% of the $25 billion. She notes this article from the Financial Times by Shahien Nasiripour

   California, home to the largest US property market, spurned an offer of roughly $15bn in lower monthly mortgage payments and reduced loan balances for its residents in talks to settle allegations of mortgage-related misdeeds by leading US banks…

   California would have received more than half of about $25bn of aid that would be available to borrowers in a nationwide deal under discussion to settle allegations that banks illegally seized homes using faulty documentation.

   Deal terms, sent to state attorneys-general late last week after nearly a year of talks between the banks and various states and federal agencies, did not include guaranteed minimums for any other states, people familiar with the matter said. Various state officials said they were unaware of the California offer.

Yves notes that AG Masto in question #24 asks for clarification of how much each state would receive.

I agree with Yves that it’s hard to imagine how any attorney general could sign onto this agreement and begs to question why Florida’s AG Pam Bondi would be pushing California to sign on to this and not pushing for a better settlement for the homeowners of her state. Masto certainly did her homework as David Dayen at FDL News Desk noted:

n other words, Masto did her homework and saw this settlement as little more than a framework, without specificity on the release, the level of relief on a per-state basis, and the level of enforcement. Or, in other words, everything. And by the way, they want an answer by the end of the week. That’s clear at the end of Masto’s letter, where she writes: “Because there is a sign-on deadline of February 3, 2012, I need this information as soon as possible to allow my office to continue to evaluate the proposal on behalf of the state of Nevada.”

Every AG should be asking these same questions including Eric Schneiderman.

And that leads to the question of Eric Schneiderman and his motivations for sitting on the sideline and not opposing what appears to be a walk from liability for the banks and screw the homeowners. This is a very disappointing development and it won’t win Obama any votes either.

Over the weekend Occupy Oakland attempted to occupy an abandoned building into into a community center to provide education, medical, and housing services for the 99%. Police responded with tear gas, rubber bullets, beanbag rounds and mass arrests. From Occupy Oakland Media

January 29, 2011 – Oakland, CA – Yesterday, the Oakland Police deployed hundreds of officers in riot gear so as to prevent Occupy Oakland from putting a building, vacant for 6 years with no plans for use, from being occupied and “re-purposed” as a community center. The Occupy Oakland GA passed a proposal calling for the space to be turned into a social center, convergence center and headquarters of the Occupy Oakland movement.

The police actions tonight cost the city of Oakland hundreds of thousands of dollars, and they repeatedly violated their own crowd control guidelines and protesters civil rights.

With all the problems in our city, should preventing activists from putting a vacant building to better use be their highest priority? Was it worth the hundreds of thousands of dollars they spent?

The OPD is facing receivership based on actions by police in the past, and they have apparently learned nothing since October. On October 25, Occupiers rushed to the aid of Scott Olsen who was shot in the head by police, and the good Samaritans who rushed to his had had a grenade thrown at them by police. At 3:30pm this afternoon, OO medics yet again ran to the aid of injured protesters lying on the ground. Other occupiers ran forward and used shields to protect the medic and injured man. The police then repeatedly fired less lethal rounds at these people trying to protect and help an injured man.

No one condones throwing objects at police, violence or vandalism but it does not justify the overreaction by the Oakland police department use of military type weapons to stop unarmed protesters.

From Kevin Gosztola who describes the videos below in his reporting on the Occupy movement at FDL:

Recorded video footage from the scene shows officers did not give a dispersal order. They pushed protesters toward the YMCA and would not let them leave the scene as they ordered them to “submit” to the arrest. The protesters then did what anyone would do as a battalion of riot police closed in on them: they found the nearest escape route, which happened to be through an entrance to the building. [*See the 30-min mark of the video below.]

I will not condone the throwing of objects at police, but the video captured by Mills, who was also at the scene when percussion grenades, tear gas and other weapons were being fired by police, calls into question the [statements by the city  that protesters were “charging” police. Yes, they were advancing on the riot police, slowly. A handful, like any protest, were egging on the riot police. But, if you watch the video the moment the riot police move on the protesters they immediately fall back. They do not let the police charge into them, which raises doubts about whether it was ever necessary to fire off any chemical weapons at protesters to force the crowd to disperse.

Sunday night in solidarity with Oakland Occupiers took to the streets in cities across the country:

#SolidaritySunday with Oakland Marches in NYC and Across the US; Bank of Ideas Being Evicted in London

As of 8pm EST, actions are currently happening or planned in response to extreme police violence used against Occupy Oakland yesterday in New York City, Boston, Toronto, Vancouver, Melbourne, Oslo, Philadelphia, DC, Chicago, Los Angeles, Dallas, Portland, Tampa, Indianapolis, New Haven, Orlando, Jackson, Des Moines, Hollywood, Baltimore, Portland ME, Tulsa, Denver, St. Louis, Eugene, Nashville, and Detroit. We have also received word that the Bank of Ideas in London is being raided!

At noon today, Occupy DC faces a ban on camping in the parks but will remain in McPherson Square.

We stand with the Occupy Wall Street movement and the right to peaceful assembly.

Democratic challenger for the US Senate seat from Massachusetts and Harvard Law professor, Elizabeth Warren has been a popular guest this week on the cable networks. She appeared on MSNBC Thursday following the Republican debate and assessed Republicans as favoring a policy to “invest in those who already made it”. She specifically addressed wealthy businessman Mitt Romney’s income and his preferred tax rate:

“Mitt Romney pays 14 percent of his income in taxes, and people who get out there and work for a living pay 25, 28, 30, 33 percent. I get it, Mitt Romney gets a better deal than any of the rest of us because he manages to earn his income in a way that has been specially protected for rich folks,” said Ms. Warren.

Her assessment of former House Speaker Newt Gingrich was equally critical on his proposed tax policy of reducing everyone’s tax rate to 15% and expressed her support of “Warren Buffett rule” that would raise taxes on the wealthiest Americans.

Earlier on Tuesday night with Jon Stewart on Comedy Central’s “The Daily Show“, she informed Jon that “The Pats are gonna spank the Giants” and addressed tax policy, lobbying, and investment, her signature issues. She opposes cuts in education research as detrimental and the need to invest in the middle class. In Part 2, she goes on to describe the role that government should play in regulating America’s private sector.  This is the unedited interview that is only available on line

There are those who are concerned that Warren, a political novice, will compromise her principles to the pressure of Wall St. hawks like Sen. Charles Schumer (D-NY). After watching her dress down Treasury Secretary Tim Geithner during hearings as chair of the five-member Congressional Oversight Panel created to oversee the implementation of TARP, I think she’ll be able to stand her ground. I’ll forgive her for her support of the Patriots. Nobody’s perfect.