Tag: Economy

President Obama announced that millions more underwater homeowners can take advantage of a refinancing program if their loan is owned or guaranteed by Fannie Mae or Freddie Mac. But, there are shortcomings, helpings banks more than homeowners by eliminating liability associated with the origination of the mortgage, including putback liability. From Yves Smith who asks why Obama is bothering to do this:

First, Obama is addicted to the appearance of Doing Something, regardless of whether it is productive. A clear sign is the apparent failure to investigate why HARP was a dud.

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Second, this is a sop to the banks, because a refi ends any liability associated with the origination of the mortgage, including putback liability. Now that would seem to be a big “get out of jail free” card for banks engaged in putback litigation. But the reason this is not as nefarious as it might seem is that current mortgages aren’t the big bone of contention in putbacks (even if the originator lied, the borrower is paying, so there are no damages). But it would also end any chain of title issue on that mortgage

At Huffington Post, Zack Carter gives a more detailed explanation:

   The newly expanded program would expunge legal liabilities associated with mortgages refinanced through the program for the original lenders of the mortgages. Each time a bank sent a loan to Fannie and Freddie, it certified that the loan met Fannie and Freddie’s safe lending criteria. But many loans sent to the mortgage giants did not, in fact, meet those criteria. Currently, when borrowers default on those ineligible loans, the mortgage giants can “put back” the resulting losses onto the banks that pushed the loans.

   Under the modified plan, “put back” liability at banks will be erased for any underwater mortgage that is refinanced through HARP, eliminating Fannie and Freddie’s ability to sack lenders with losses in the event that the mortgage does not pan out.

   If borrowers go through HARP, but decide after several months that the modest monthly savings do not outweigh owing tens of thousands of dollars more than their home is worth, taxpayer-owned Fannie and Freddie will have to take the full loss. Even if the original loan was sent to Fannie and Freddie with false or fraudulent guarantees from the bank – promises that may directly be tied to the borrower’s current financial problems – banks will be immune from liability. Fannie and Freddie plan to charge banks “a modest fee” to extinguish this liability, but the administration has yet to determine what that fee will be.

Professor William Black of the University of Missouri, Kansas City and Zack Carter of the Huffington Post join Dylan Ratigan to discuss the problems of Obama’s mortgage program

Perry: Tax Cuts For All, Protect Social Security – And Privatize It

Rick Perry gave a major speech in South Carolina on Tuesday, laying out his “Cut, Balance and Grow” economic plan – the centerpiece of which is a tax reform proposal that would give people the choice of filing their taxes under the current code, or a 20% flat tax.

The political benefit of such a plan should be obvious: Allowing wealthier individuals to take a huge tax cut, while in theory not necessarily raising taxes on lower-income people who would not do as well under a flat tax, by at least giving them the legal option of paying a lower rate with more paperwork.

Perry also called for a drop in the corporate tax rate to 20%, while also eliminating loopholes. He would also not tax repatriated profits, if the taxes were already paid in the countries where the profits were earned. And, for a limited time, he would offer a reduced tax rate of 5.25% on repatriated earnings.

On Social Security, Perry appeared to give two contrary messages: To uphold the solvency of the program – and to allow young workers to divert funds away from it.

From the prepared remarks:

   Second, we will end the current pillaging of the Social Security Trust Fund by Washington politicians. Here is the hard truth: the trust fund is full of IOU’s, without a single dime of money left over from what workers have paid in. The politicians have borrowed against it for years. And in order to redeem the IOU’s in the fund, they will have to either raise taxes or cut spending on other programs to replenish it.

   Here is the other hard truth: if we don’t act, in 25 years benefits will be slashed 23 percent overnight. Protecting Social Security benefits begins with protecting the solvency of the fund, and stopping all current borrowing from the fund, just as we have done with the highway trust fund.

But this is then immediately followed by:

   The third principle of reform is to allow young workers to invest a portion of their payroll taxes into private accounts if they so choose.

   I am not naïve. I know this idea will be attacked. But a couple of facts are worth stating: one, the return on investment in Social Security is so small it is like an interest bearing savings account. Over the long-term, the markets generate a much higher yield.

   Second, opposition to this simple measure is based on a simple supposition: that the people are not smart enough to look out for themselves. The liberals think the American people cannot be trusted to safeguard even a portion of their own retirement dollars. It is time to end the nanny state and empower our people to exercise greater control over their money.

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

New York Governor, Andrew Cuomo, got told “No, we won’t do that” by Albany’s police and New York State troopers when ordered to clear Occupy Wall Street protesters from a park across the street from the state Capitol and Albany ‘s City Hall:

ALBANY — In a tense battle of wills, state troopers and Albany police held off making arrests of dozens of protesters near the Capitol over the weekend even as Albany’s mayor, under pressure from Gov. Andrew Cuomo’s administration, had urged his police chief to enforce a city curfew.

The situation intensified late Friday evening when Jennings, who has cultivated a strong relationship with Cuomo, directed his department to arrest protesters who refused to leave the city-owned portion of a large park that’s across Washington Avenue from the Capitol and City Hall.

At the Capitol, in anticipation of possibly dozens of arrests, a State Police civil disturbance unit was quietly activated, according to officials briefed on the matter but not authorized to comment publicly. But as the curfew neared, the group of protesters estimated at several hundred moved across an invisible line in the park from state land onto city property.

“We were ready to make arrests if needed, but these people complied with our orders,” a State Police official said. However, he added that State Police supported the defiant posture of Albany police leaders to hold off making arrests for the low-level offense of trespassing, in part because of concern it could incite a riot or draw thousands of protesters in a backlash that could endanger police and the public.

“We don’t have those resources, and these people were not causing trouble,” the official said. “The bottom line is the police know policing, not the governor and not the mayor.”

And to add to the ego deflation for Gov. Cuomo, Albany County District Attorney David Soares has stated:

“Our official policy with peaceful protesters is that unless there is property damage or injuries to law enforcement, we don’t prosecute people protesting,” Soares said. “If law enforcement engaged in a pre-emptive strike and started arresting people I believe it would lead to calamitous results, and the people protesting so far are peaceful.”

The camp has been named “Cuomoville”

Some protesters Monday were angry with the governor.

“Gov. Cuomo’s new name is Gov. 1 Percent because that’s who he chooses to represent – the more wealthy residents of New York state, those on Wall Street, his backers and supporters,” said Victorio Reyes, 37, a community organizer with the Social Justice Center of Albany who was making video reports from the park. “We’re not going to stand for it.”

Cuomo insists the temporary surcharge on incomes over $200,000 should expire Dec. 31, as planned when it was created under Gov. David Paterson to address a fiscal crisis. Cuomo and other opponents of the tax say it and a new proposal to tax earnings over $1 million would drive tax revenue and jobs out of state.

As anyone knows who has ever had to set up a military encampment or build a village from the ground up, occupations pose staggering logistical problems. Large numbers of people must be fed and kept reasonably warm and dry. Trash has to be removed; medical care and rudimentary security provided — to which ends a dozen or more committees may toil night and day. But for the individual occupier, one problem often overshadows everything else, including job loss, the destruction of the middle class, and the reign of the 1%. And that is the single question: Where am I going to pee?

Some of the Occupy Wall Street encampments now spreading across the U.S. have access to Port-o-Potties (Freedom Plaza in Washington, D.C.) or, better yet, restrooms with sinks and running water (Fort Wayne, Indiana). Others require their residents to forage on their own. At Zuccotti Park, just blocks from Wall Street, this means long waits for the restroom at a nearby Burger King or somewhat shorter ones at a Starbucks a block away. At McPherson Square in D.C., a twenty-something occupier showed me the pizza parlor where she can cop a pee during the hours it’s open, as well as the alley where she crouches late at night. Anyone with restroom-related issues — arising from age, pregnancy, prostate problems, or irritable bowel syndrome — should prepare to join the revolution in diapers.

Of course, political protesters do not face the challenges of urban camping alone. Homeless people confront the same issues every day: how to scrape together meals, keep warm at night by covering themselves with cardboard or tarp, and relieve themselves without committing a crime. Public restrooms are sparse in American cities — “as if the need to go to the bathroom does not exist,” travel expert Arthur Frommer once observed.  And yet to yield to bladder pressure is to risk arrest.

President Obama and Washington still don’t get it. The Obama administration and Congress either don’t understand or are choosing to ignore the message from Occupy Wall St. Matt Taibbi exams two “disgusting developments” that have taken place since the demonstrations started. One was the shifting a huge collection of Merrill Lynch derivatives contracts onto Bank of America’s own federally-insured balance sheet. The second is Obama apparently expressing willingness to junk big chunks of Sarbanes-Oxley in exchange for support for his jobs program

Sarbanes-Oxley is an anti-trust law which was passed by Congress in 2002 in the wake of the accounting scandals of Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation’s securities markets. Now Obama’s Council on Jobs and Competitiveness, which is made up of 27-members, mostly of corporate executives, along with a handful of investors, labor leaders and academics, would like to lift some of these regulations on the pretext that it would create jobs:

Watering down Sarbanes-Oxley has long been a goal of corporate America, despite studies by the Securities and Exchange Commission showing that the law has reduced errors and fraud, and that changes to the law have made it easier for companies to comply.

As for the supposed barriers to investment, history is rife with companies that cooked their books to lure investors and created jobs in the short run, before imploding and causing mass joblessness.

Anything-goes markets are great for investors who get out before the jig is up, or who get bailed out when their bets go bad. They are a raw deal for everyone else.

Specifically, the report calls for compliance with Sarbanes-Oxley to be made voluntary for public companies worth less than $1 billion.

That would relieve some 6,000 companies — or 75 percent of all publicly traded companies — from various requirements, including the rule that corporate boards have independent audit committees, that corporate executives attest to the accuracy of the company’s financial statements, and that bonuses based on fraudulent statements be subject to clawback.

The view of this proposal from Canada:

It has come to this, then: In the all-consuming desire to do something, nearly anything, to promote job creation, Mr. Obama seems willing to gut one of the most significant investor protections of our time. If the anti-Sarbanes Oxley proposal succeeds, it is the Americans – and Canadians – who invest in U.S. stocks who will lose.

Sarbanes-Oxley, among many things, required the chief executive officer and chief financial officer publicly sign off on the accuracy of company financial reports and, with its “404” provisions, forced companies to document the internal controls used to produce accurate financial statements. Separately, the “Spitzer Decree” tried to improve the quality of analyst research by cutting the link between it and deal fees. And the Fair Disclosure Act set up rules to keep companies from whispering material information to favoured investors.

The Jobs Council is taking aim at all of it, suggesting rules be “right-sized” to exempt all but the largest companies. “Well-intentioned regulations aimed at protecting the public from the misrepresentations of a small number of large companies have unintentionally placed significant burdens on the large number of smaller companies,” the Jobs Council said in its interim report.

Unfortunately, the Jobs Council misunderstands or misrepresents the history of Sarbanes-Oxley and proposes a sledgehammer solution that fails to kill the fly, while smashing investors in the chops.

While Enron and WorldCom provided the political impetus to get Sarbanes-Oxley passed, there were sound intellectual underpinnings to the 404 provisions, which required companies to spend significant sums on improving internal controls. U.S. companies, absent regulation, simply weren’t spending the time or money required to do the best possible job of producing accurate financial statements.

Smaller companies, particularly those who recently went public, often were the worst offenders; they are now the companies the Jobs Council most wants to spare from the provisions.

Taibbi:

If the financial crisis proved anything, it’s that Wall Street companies in particular have been serial offenders in the area of dishonest accounting and book-cooking. Sarbanes-Oxley is obviously no panacea, but removing it in exchange for a temporary, election-year job boost is exactly the kind of myopic, absurdly irresponsible shit that got us into this mess in the first place. For Obama to pull this in the middle of these protests is crazy.

If anyone thought OWS has already done its job, and Washington has gotten the message already, think again. They’re not going to change until the protesters force them to change, it seems.

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

Naomi Wolf, political activist and author of “Give Me Liberty,” calls attention to the enormous power that the federal government can wield to prevent constitutionally guaranteed rights. “History shows they start with the Other and it gets closer and closer and closer and someday they come for you.”

Mayor Bloomberg is planning Draconian new measures to crack down on what he calls the “disruption” caused by the protesters at Zuccotti Park, and he is citing neighbors’ complaints about noise and mess. This set of talking points, and this strategy, is being geared up as well by administrations of municipalities around the nation in response to the endurance and growing influence of the Occupation protest sites. But the idea that any administration has the unmediated option of “striking a balance,” in Bloomberg’s words, that it likes, and closing down peaceful and lawful disruption of business as usual as it sees fit is a grave misunderstanding — or, more likely, deliberate misrepresentation — of our legal social contract as American citizens.

Some kinds of disruption in a free republic are not “optional extras” if the First Amendment governs the land, as it does ours, and are certainly not subject to the whims of mayors or local police, or even DHS. Just as protesters don’t have a blanket right to do everything they want, there is absolutely no blanket right of mayors or even of other citizens to be free from the effect of certain kinds of disruption resulting from their fellow citizens exercising First Amendment rights. That notion, presented right now by Bloomberg and other vested interests, of a “disruption-free” social contract is pure invention — just like the flat-out fabrication of the nonexistent permit cited in my own detention outside the Huffington Post Game Changers event this last Tuesday, when police told me, without the event organizers’ knowledge and contrary to their intentions, that a private entity had “control of the sidewalks” for several hours. (In fact, the permit in question — a red carpet event permit! — actually guarantees citizens’ rights to walk and even engage in political assembly on the streets if they do not block pedestrian traffic, as the OWS protesters were not.)

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

Spirits were high last night as occupiers were joined by 92-year-old folk legend Pete Seeger for a late night march to Columbus Circle, where a midnight performance featuring Seeger’s grandson Tao Seeger, Arlo Guthrie, composer David Amram, bluesman Guy Davis and others.

A live stream of the action offered millions an opportunity to view the transcendental nature of the moment that was unfolding. The march was one of the most inspiring yet because the repetitive chants were abandoned for folk songs Pete Seeger & others are known for singing. “Ain’t Gonna Study War No More,” “O Mary Don’t You Weep” & “This Little Light of Mine” were all sung by people while marching to Columbus Circle.

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It was truly a spiritual experience and opportunity for younger generations to hear some of the best folk/protest music in the history of America. Songs like “This Land is Your Land” have become patriotic songs yet the song written by Woody Guthrie is actually a song for revolutionaries. That is why a sanitized version of the song is often sung. Pete Seeger actually sang the version with lost verses during a “We Are One” concert at the Lincoln Memorial that was part of Obama’s Inauguration.

This is one of the typically absent verses:

“As I went walking I saw a sign there

   And on the sign it said “No Trespassing.”

   But on the other side it didn’t say nothing,

   That side was made for you and me.”

Pete Seeger, Tao Rodríguez-Seeger, Arlo Guthrie, Guy Davis, Tom Paxton, Tom Chapin and David Amram joined Occupy Wall Street on a march from Broadway and 95th Street in the Upper West Side of Manhattan, down to Columbus Circle at Broadway and 59th Street. When we got there, this is what happened.

Nobel Prize-winning economist and New York Times columnist Paul Krugman celebrates the Occupy Wall Street movement’s ability to refocus the country’s and Washington’s attention from deficits to jobs when economists like Krugman could not. “It turns out that no number of learned papers on how we’re doing this wrong, no number of sober editorials on how we’re doing this wrong was making a dent.”

I visited Zuccotti Park yesterday. Michael Moore gave a short speech, transmitted by the human microphone. I gather that right-wingers are claiming that OWS is anti-Semitic; someone forgot to tell the excellent Klezmer band.

Overall, what struck me was how non-threatening the thing is: a modest-sized, good-natured crowd, mostly young (it was a cold and windy evening) but with plenty of middle-aged people there, not all that scruffy. Hardly the sort of thing that one would expect to shake up the whole national debate. Yet it has – which can only mean one thing: the emperor was naked, and all it took was one honest voice to point it out.

As for how the emperor got that naked: read Ari Berman’s article on the austerity class, and its dominance in Washington.

PORTLAND, Ore. (AP) – When “Occupy Wall Street” protesters took over two parks in Portland’s soggy downtown, they pitched 300 tents and offered free food, medical care and shelter to anyone. They weren’t just building, like so many of their brethren across the nation, a community to protest what they see as corporate greed.

They also created an ideal place for the homeless. Some were already living in the parks, while others were drawn from elsewhere to the encampment’s open doors.

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

If you have to ask , you haven’t been listening

Cenk Uygur and “The Young Turks” are at Occupy Wall Street in New York City all week.

In this interview, writer Jesse LaGreca tells Cenk about becoming Fox News public enemy No. 1 after he called out a producer’s biased questions in a clip that made it online, if left on the cutting room floor.

A campaign against arbitrary searches by the NYPD gets a boost from Occupy Wall Street

Occupy Wall Street headed to Harlem Friday afternoon in a solidarity march that ended with the arrests of a few dozen protesters including Princeton professor Cornel West – just days after his arrest in Washington, D.C., at another demonstration.

The arrests, which occurred after marchers linked arms in front of a fortress-like NYPD station just off Frederick Douglass Boulevard, were a planned act of civil disobedience.

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Finally, here is West’s speech just a few minutes before he and other protesters were arrested:

The New York Post reported there will be more arrests of Occupy Wall Street participants, who do not abide by New York City laws for demonstrations. Bloomberg also warned that a crackdown was coming.

The Post quoted the Occupy Wall Street media coordinator Thorin Caristo, who stated:

  “His inability to create a clear and definitive opinion or position on OWS just shows he’s being tossed around like a bird in a storm. We all know what that storm is, that storm is the growing concern in the higher factions of Wall Street, that this movement might actually be making a difference…The mayor’s statements sound hardline and I have no doubt he may actually try to enforce those. But we all know that every time excessive police force is used in this situation the movement grows exponentially.”

The city should not take this point lightly. Use of excessive police force or any effort to disperse the encampment will only invigorate the occupation with renewed support. It will only lead to more marches and gatherings that the police will be deployed to babysit. It will only amplify scrutiny of New York City and its police force by the media and the people of the world.

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

One of the groups that Health Care for the 99% is planning a major event on October 26, Get Wall Street out of Healthcare!! March Against the Health Insurance Industry. There is a planned march to the offices of Empire Blue Cross Blue Shield, WellCare and St Vincent’s Community Hospital which closed earlier this year due to bankruptcy. St Vincent’s is a casualty of profit-driven insurers and a healthcare system that leaves 50 million Americans uninsured. There are now no hospitals on the westside below 57th st. I am planning on participating in that march. Stay tuned.

Disgruntled Verizon Communications and Verizon Wireless workers and members of the labor union Communications Workers of America will be joining the “Occupy Wall Street” protest Friday in protest of “Verizon’s corporate greed.”

In a press release issued Thursday afternoon, the CWA said that about 1,000 Verizon workers will meet at Verizon’s headquarters in downtown Manhattan near Wall Street at 4 p.m. ET and march past Liberty Plaza/Zuccotti Park where “Occupy Wall Street” protesters are gathered. The march will end at a Verizon Wireless dealer on Broad Street. Many of the protesters are then expected to return to Liberty Park and stay through the night.

NYers:

LISTEN UP!

Please come to the meeting tonight or send our messages or write about people coming to the meeting of the combined Quality of Life and Financial District subcommittee

Real Estate Board of New York asking the city to prohibit Occupy Wall Street-style use of public space.

In fact, the Real Estate Board of New York is reportedly preparing to ask the city to endorse universally applicable rules prohibiting future Occupy Wall Street-style use of public space, along with the automatic right to close all spaces at night.

REBNY is the 1%.

The Board’s ranks consist of 12,000 owners, builders, brokers, managers, banks, insurance companies, pension funds, real estate investment trusts, utilities, attorneys, architects, marketing professionals and many other individuals and institutions involved in New York realty.

It didn’t sound like this was as bad as they expected. The Board of Realtors would still have to go through the city council process to get any changes and that won’t happen anytime soon.

Click on image to enlarge

One of the key activists behind Egypt’s “Facebook Revolution” is now giving advice to a new group of protesters: the Occupy Wall Street movement.

The protesters in New York’s Zuccotti Park – and their offshoots around the country – often cite the mass demonstrations earlier this year in Cairo’s Tahrir Square as their inspiration. So maybe it shouldn’t be much of a surprise that Ahmed Maher, one of the leading figures in those Egyptian protests, has been corresponding for weeks with the Occupy Wall Streeters, whom he calls “our brothers.”

Maher is one of the founders of the April 6 Youth, which used Facebook, Twitter and YouTube to galvanize Egyptians against President Hosni Mubarak. Recently, however, his attention has turned toward America, where he’s been chatting online with Occupy activists. Those conversations center around practical advice from a successful Egyptian revolutionary. Usually, they occur through Facebook. On Tuesday, for the first time, they happened face to face.

“We talk on the internet about what happened in Egypt, about our structure, about our organization, how to organize a flash mob, how to organize a sit-in,” Maher tells Danger Room, and “how to be non-violent with police.”

The “30 Rock” star and newly minted podcaster, Baldwin has, during the protesters’ occupation of Wall Street, advocated for tighter bank regulations and more strict enforcement of those regulations. Arriving around midnight, he tweeted at 1:37, “My thanks 2 Aaron from Brooklyn and Sean from Winnipeg for this evening’s OWS tutorial. My first. A lot of dedicated people at #ZuccottiPark.”

He sent out a series of tweets following his departure, saying, “OWS needs to coalesce around some legislative policy. The ‘occupy’ strategy may be an effective one. But what can each entity agree on?” and “Campaign finance reform remains the linchpin of our democracy’s many problems.”

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The star then followed that defense of banks’ existence, saying, “We need a healthy banking system in this country. We need strong capital markets. What is missing are regulations with teeth.”

Two weeks ago we conducted an anonymous poll on this website to learn more about our visitors. We asked Héctor R. Cordero-Guzmán Ph.D, sociologist of the City University of New York to look at the data, which he analyzed to create an original academic paper titled “Mainstream Support for a Mainstream Movement” (pdf).

His analysis shows that the Occupy Wall Street movement is heavily supported by a diverse group of individuals and that “the 99% movement comes from and looks like the 99%.” Among the most telling of his findings is that 70.3% of respondents identified as politically independent.

Dr. Cordero-Guzmán’s findings strongly reinforce what we’ve known all along: Occupy Wall Street is a post-political movement representing something far greater than failed party politics. We are a movement of people empowerment, a collective realization that we ourselves have the power to create change from the bottom-up, because we don’t need Wall Street and we don’t need politicians.

Since our humble beginning a few short weeks ago, we’ve helped inspire people around the world to organize democratic assemblies in their own communities to take back public spaces, meet basic needs, make their own demands, and begin building a better world today.

Below is Dr. Cordero-Guzmán’s executive summary of his findings along with a link to his full academic paper.

Author was arrested alongside Occupy Wall Street protesters after she disputed police claims that they had to clear sidewalk

The feminist author Naomi Wolf has criticised the erosion of the right to public protest in the United States after she was arrested alongside Occupy Wall Street demonstrators in New York.

Wolf was led away in handcuffs after addressing protesters outside an awards ceremony held to honour New York’s governor, at which she was a guest.

The latest proposal to come from of the State Attorney Generals investigating mortgage and foreclosure fraud is just a another band-aid on a hemorrhage that lets the banks off and does nothing to help homeowners who are underwater on their mortgage or behind in their payments. It appears that this is just a ploy to bring the California Attorney General “back into the fold.” Diana Olick, CNBC Real Estate Reporter, has tis analysis:

As first reported by the Wall Street Journal, the AG’s are proposing a refinance plan for underwater borrowers, trying to get banks to bring down interest rates on mortgages for those who owe far more than their homes are presently worth; that’s around 10.9 million borrowers, according to CoreLogic, but sources say it wouldn’t be all of them. It would, “target a finite number of borrowers who are current on their mortgages,” according to my source.

My source then went on to explain that this is a plan previously pushed by the California state attorney general, who has dropped out of the negotiations over issues surrounding banks’ release from future liability (the California AG did not comment in the WSJ article but claimed they had not seen said proposal). New York and Massachusetts have done the same. Apparently this could, “bring California back to the table,” says my source, because the California AG finds it, “intriguing.”

Ms. Olick also points out that this is the same plan that the Obama administration has proposed for Fannie Mae and Freddie Mac. The plan will only affect about 20% of homeowners with bank mortgages. While it would give some, who can afford the loans, a little extra cash, it doesn’t “change the fact that these folks still have no hope of seeing their home equity again any time soon, and it doesn’t address the greater ills of today’s housing market that are keeping true recovery at bay.”

David Dayen at FDL expounds further:

But wait! This is supposed to be a penalty on the banks. Is it a penalty on the banks when an eligible borrower with a bank-owned loan refinances? No, that’s just an option that the borrower has. Extending that option is supposed to be a penalty for committing systemic fraud on state courts? I don’t necessarily mind the Fannie/Freddie plan as a source of potential stimulus. I don’t consider it a penalty. And when you’re talking about 20% of the market, tops (and not all of those loans are underwater, so this is smaller), the benefits are miniscule (sic).

They’re just grabbing at straws to try and get a flawed settlement across the line that the remaining AGs can hold a press conference about. And economic stimulus, not accountability, is the main goal. Keep in mind that anything that leads to a round of sped-up foreclosures will not aid the housing market. It will bring prices down, just as a function of supply and demand. This will bring borrowers more underwater. So the idea that there’s a tension between the rule of law and helping people presumes that the only thing standing between America and a recovery is Kamala Harris and Eric Schneiderman. That’s just not true. There are tools at the disposal of the relevant regulators right now to foster recoery (sic), they’re just not choosing to do it.

Delaware Attorney General Beau Biden spoke with MSNBC’s Dylan Ratigan about fight to investigate the banks.

The biggest problem that is the gorilla in the room is chain of title. In a detailed article that is well worth the read, Yves Smith at naked capitalism:

And as we anticipated, the inducement that had led the Miller camp to hope it might clinch a deal is a juicy release. From Reuters:

   Originally, the states were only considering immunity for shortcuts taken during mortgage servicing and foreclosures, including the so-called “robo-signing” of documents to evict people behind on their mortgages.

   In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.

   In exchange, banks would agree to refinance mortgages for borrowers who are current on their payments but owe more than their homes are currently worth, the sources said.

This is very troubling. Investors should be up in arms. Any release the banks get here is worth multiples of what the banks will pay for this (note that because investors are conservative creatures and have ongoing relationships with banks, having attorneys general pave the way is particularly important for them).

The failure to verify income is the tip of the iceberg of origination abuses. The most serious is chain of title, where the banks promised to investors to take a series of steps to convey the mortgages properly to the securitization trusts within a stipulated time frame. For reasons we’ve explained in gory detail in earlier posts, retroactive fixes or waivers simply won’t work. That is why the banks have resorted to widespread forgeries and document fabrication.