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Intro: "A few weeks back, I was optimistic about it - I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses. However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy."

Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)
Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)

Why the Foreclosure Deal Is a Letdown

By Matt Taibbi, Rolling Stone

10 February 12


o the foreclosure settlement is through.

A few weeks back, I was optimistic about it – I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.

However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.

It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.

So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that. There will be little in the way of real compensation for stuggling homeowners, and there are serious issues in the area of the deal's enforceability. In fact, about the only part of the deal we can be absolutely sure will be honored in full is the liability waiver for the robosigning offenses.

With the rest of it - collecting on the settlement, enforcement of the decrees, all the stuff put in there to balance the deal in the consumer's direction - there will be an uphill battle from this point forward to get the banks to comply. The banks meanwhile have no such uphill battle. They will get the full benefit of the deal (a release from costly litigation) from the moment the ink is dry.

Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.

I think the best summation of the settlement is probably Yves Smith's, which can be found here. The piece lists the 12 things that suck the most about the settlement. The most painful is probably #12:

12. We'll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won't ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

My mistake in looking at this deal a few weeks ago, when details of it first leaked out, was in focusing on how much worse it could have been, instead of thinking about how bad it still is. The only acceptable foreclosure deal had to bring about a complete end to robosigning and the other similar corrupt practices that grew up around it (like for instance gutter service, the practice of process servers simply signing affidavits saying they delivered summonses, instead of really doing it).

But this deal not only doesn't end robosigning, it officially makes getting caught for it inexpensive. Shame on me for ever thinking that might be a good thing. your social media marketing partner


+69 # papabob 2012-02-10 16:48
Another reason for Occupy Wall Street to continue. If the government can't (or won't) solve the problem that everybody sees, the 99% have to take it in their own hands.

I can't believe that we're being let down again.
+44 # Lulie 2012-02-10 18:37
Believe it.
+18 # Rita Walpole Ague 2012-02-11 05:44
"Liability waiver" just about says it all. And, papabob, your "...can't (or won't) solve the problem..." also hits it on its evil greed and power addicted affliction.

As long as we pull back from severely punishing those who defraud, be it in the banking industry, on Wall Street, within the military-indust rial-terror complex, and in the in more ways than one dirty oil, coal, et. al. industries, et. al., our current dysfunctional govt., by and through our floundering legal system (i.e. Kochsucking Supreme Court) is bowing down to and encouraging the greed and power addicted villainaire 1%ers.

Recall in '08 how so many of us saw how taken over by the evil ones our country was, and turned out in mass, determined to create the so needed change that we were conned into believing would and could happen during by a Chicago style pol. named Obama's campaign. What a con job it was. Soc. 101: change does not come from the middle. Sorry, but Pres. Oh Bomb Ah, is a centrist and bow downer to the villainaire rulers.

Let's all join with Occupy, and, Wisconsin style, revolt 'til we bring about the real McCoy changes that are so needed. Lots or courage and determination needed if we are to.....

+49 # gentle 2012-02-10 18:44
Just proves that with money, you can steal from anyone, legally. What ever happened to don't do the crime, if you can't do the time? In the words of Slim Pickins, "I am surely depressed".
+49 # Rick Levy 2012-02-10 19:27
The settlement is truly a f**king joke. But the only ones laughing are the banks.
-40 # albertchampion 2012-02-10 23:09
matt continues to be a dick. you might even think he was kos.
+20 # reiverpacific 2012-02-11 10:26
Quoting albertchampion:
matt continues to be a dick. you might even think he was kos.

So what's your point? Do you have anything to contribute or nothing better to do than sling unsubstantiated pig-droppings from the sidelines.
Call up Rush L' -this is the kind of Rhetoric he uses rather than debate anybody. This is a discussion forum, not a high-school bully-session.
And I don't think that "kos" is English (redneck Swahili???)..
+13 # nizzzie 2012-02-10 23:25
Until and unless all underwater homes have mortgages no greater than fair market value, our housing and economy will not recover..... STRATEGIC DEFAULT is the only solution
+17 # DPM 2012-02-10 23:28
We need to have a well publicized "extra judicial" trial, with legal scholars arguing the cases. Though any "verdict" could not be enforced, it will bring the scoundrels and their offenses squarely in front of the public. Who knows, perhaps it could prod our so called representatives to action. We need to find some high profile individuals to bring this about. Any ideas?
+5 # molesoul 2012-02-11 18:29
This is an excellent idea. Certainly there are some legal groups and individuals who would be interested in taking up the case. The American public needs to see very clearly what happened in the funancial crisis and what this settlement did not achieve in the way of justice.

My thoughts at the idea of the government not having the resources to do battle with the banks: how utterly pathetic, but a little creativity could perhaps remedy that.
+9 # YELLOWDOG 2012-02-10 23:41
I was very disappointed when you said that wks ago, Matt. As naive as I can be, I knew it was farcical. LOL, no one is above the law, right? We all remember that one.
+14 # Majikman 2012-02-11 00:28
Does anyone remember when Bush & Rove took a meat cleaver to the AG's? Or when they loaded up the DOJ with those clowns from Falwell's "university" (name escapes me at the moment). Guess what...those people are still there and cannot be fired. I'm certainly no Holder fan, but he does have the Augean stables on his hands and he's no Hercules.
This country is so broken and we're furious the Obama hasn't magically fixed it all.
Just a little perspective, folks.
+8 # CandH 2012-02-11 12:57
You mean the same President who just signed into LAW, NDAA, that legally allows him as President to kill US citizens on US soil dismissing habeas corpus Constitutional provisions? You mean that "magically [not] fixed it all" President?
+8 # Observer 47 2012-02-11 13:07
Not only has Obama not fixed it, he's reneged on every campaign promise, abandoned single payer, escalated in Afghanistan, and handed billions to Wall Street. Nope, we are surely not expecting any magic at this point!
+19 # grouchy 2012-02-11 02:23
Seems like we are well prepared to fight a long costly (in lives and money) war in Iraq in order to steal their oil (it didn't work exactly like we planned tho), but we can't stick to the task of holding these bank thieves ACCOUNTABLE in any meaningful way. Does anyone feel this isn't right?
+12 # jhainaut 2012-02-11 05:01
I have a question. If the big banks have no depositors and no new mortgages, will they be able to continue this travesty?
+9 # futhark 2012-02-11 05:48
What is money? What is value? The government, in cahoots with the big banks, giveth and taketh away.
+18 # artsci 2012-02-11 05:49
We have a Justice Department that no longer upholds justice; a Supreme Court in the same corporate pockets as our president, senators, and congressmen; corporate welfare run wild; and the total inability of government to address the challenges that are a threat to the future of the entire planet. If all of this continues, we will have a second American revolution and likely a global uprising. That's what people in power fear most, which is why our government is steadily narrowing our civil liberties and arming local police forces at the level of small armies.
+16 # gdp1 2012-02-11 07:01
...this corruption....d ishonors 'The Greatest Generation',... and alters democracy...whe n the criminal class runs America, and the people who object to the criminality are said to be 'terrorists'... it's truly, no country for old men. A pox on all 'securitizers'. ...
+10 # DemocracyNeedsDefenders 2012-02-11 07:46
No surprises: The President and his team are bought and paid for. In fact it looks as though that he will get even more Wall St. election money than Mitt. What do you think he traded for that?
+17 # RMDC 2012-02-11 08:02
Once more it has been proven that we don't have a criminal justice system in the US that is capable of taking on elite criminals. The justice system is very good at catching some kid with a bag of crack and sending him to jail for 10 years and wrecking the rest of his life with the felony conviction on his record. But if billionaire banks steal billions of dollars, laws are by-passed and the Dept. of Justice cuts a special deal.

The International Criminal Court was designed as a place where criminal could be prosecuted when national court systems would not do it. Now a group of former home owners who have been defrauded by big banks should take their case to the ICC. But, wait, Bush withdrew the US from the ICC and the USG has committed itself to never allowing any US citizen to be prosecuted there. So the really big criminals would just get more protection from Obama and Holder.

We have no recourse to the law anymore to protect us against the crimes of banks, corporations, the police, the government, mercenaries, and all the apparatuses of the ruling elite. GW Bush was right -- we've moved back to the old days of the "law west of the Pecos" -- i.e., the strong win and all others lose.
+14 # walt 2012-02-11 08:20
It's has always been amazing how much money went to bail out the crooks and how little has really been done for the victims.

It's time to make some serious noise about it all.
+5 # Karlus58 2012-02-11 09:33
I've been screaming loudly...yet, hardly anyone wants to listen.
+8 # Ken Hall 2012-02-11 09:08
Well of course the criminal justice branches of gov't don't have the resources to go after the Big Money that runs this country, they've been defanged and brought to heel by thirty years of conservative "free market", smaller gov't, ideology. One shouldn't let the foxes run the henhouse. And Repubs and TPers want more of the same even though it was their team and their policies that brought on the mess we're in now. Can we mandate an IQ test before a person is given voting rights?
+9 # Majikman 2012-02-11 09:55
Now wait...they did prosecute and jail one of the high rollers...Berni e Madoff. But then his big mistake was stealing from the rich...can't have that.
+4 # CandH 2012-02-11 13:04
Small potatoes actually. He hit just a few people comparatively. We are more apt to see the "smaller fraudsters" prosecuted now more than ever. The big-mafia-bosse s, ie the banksters that can't be touched, are claimed to be the Jewels-of-the-N ile, are essentially immune from criminal prosecution. This "settlement" settles it, definitively!
+9 # fixerguy G 2012-02-11 09:57
Want to actually get back at the big banks? Simple: 1) CLOSE ALL your accounts with them. 2)Re-finance your mortgage out from under them. 3)Close your retirement account and move EVERYTHING to a small bank or a credit union. I know there are at least a million of us out there who are as pissed at chase, bofa, wells, as I am. If we all do this they will capitulate.
+5 # Eliza D 2012-02-11 10:04
Young people should boycott buying new houses and taking mortgages until the people have our country back. If we are creative, we can devise other solutions for housing. We can pay a relative or friend to add an extension to their home and pay them rent, killing two birds with one stone. Our loved one's income increases, while we save money until the banking industry is cleaned up. I know the logistics of this can't work for everyone, but we should boycott banks.
+1 # Karlus58 2012-02-12 10:43
I'm all for the young folks re-setting our values. Hope they get their focus off the technology....a nd into reality.
+4 # angelfish 2012-02-11 10:52
Eliza D, EVERYONE should boycott buying new houses and/or taking out mortgages until the Banking Industry is PROPERLY called out and held ACCOUNTABLE for their CONTINUING crimes against American citizens! Washington! Are you there? Are you LISTENING? The American Spring is on the way! Listen up and start doing your JOB! PROTECT the American Consumer from Predatory Banking practices!
+5 # shortonfaith 2012-02-11 11:11
This Obama guy has us all over a barrel & he's laughing all the way to the bank. Who else are you going to vote for? Obama & Holder all know this & they are selling immunity to anyone with an account in the Cayman's. We only see what's on the surface, just imagine what's going on behind the curtail? I'm sure it 100 times as bad.

I worked & voted for Obama & he's continually sold us out. At least Reagan put 1000 bankers behind bars. Obama know we don't have a choice & he can get away with anything he wants. The whole system is evil, the very worst kind of evil.

We allowed this to happen by not taking it to the streets. Support OWS with everything you have. The 99er's are our last & only hope. If it doesn't happen this summer, we've lost it all together. We need to reverse everything these elected criminals have done. I know 6th graders that have a stronger moral compass than these bums. And bums is way to nice for the evil that lives here.
-1 # disgusted American 2012-02-11 16:44
shortonfaith - you ask who else are you going to vote for?

does this mean you're still going to vote for Obama cuz if you are showing this POS that you support all he has done.

There are other options if you truly support the 99 percent:

You can vote for Jill Stein, Rocky Anderson for starters

Or you can stay home and not cast a vote

Or you can write in a name. I didn't vote for Obama in 2008. I saw right through him. All one had to do was listen to him flop around all over tha place on health care reform and that said it all.

P.S. I voted my myself. This time around I will not vote for a D or an R b/c it's all the same thing - a one-party system disguised as two. That goes for every member of the House and Senate and includes Elizabeth Warren, an Obama clone who is just telling you what she knows you want to hear.
+4 # 2012-02-11 12:33
Taibbi is correct but it is worse than he yet sees.

Now that the numbers have been clarified at bit, it is clear that the victimized homeowners will be receiving 6% of the settlement monies. The rest will go to the feds or state governments. Where is the justice in that?

Lee Nason
New Bedford, Massachusetts
+2 # Eliza D 2012-02-11 12:53
You're right angelfish. The banks are full of criminals. It's just that so many people are locked into the idea of the isolated nuclear family. I think some people may not have thought that there are other options. Money talks, and withholding our money en masse from the banks is one way to start the American Spring. After all, we can't make ANY interest anymore through banks, or for that matter, credit unions.
+3 # tomo 2012-02-11 13:38
Good for Matt! When he entered his brief sojourn into optimism, I expressed surprise and misgivings, but I added I hoped he was right. I didn't think so then, and I'm happy to see he has returned to planet earth--where the richly demented rule--in the interval. Welcome back, Matt!
+1 # DPM 2012-02-12 00:09
Please join your local Occupy group. Help spread the word non violently.
+1 # wullen 2012-02-12 05:51
The robosigning was a bigger deal than you thought Matt. Why do you think that was the first thing off the table in the deal? It's probably the easiest piece of all this to prove criminal & prosecute. I want to know why the banks are still allowed to follow through with foreclosures when they cannot prove they even own the mortgage? Easy fix.... don't let them. No ticky no laundry.
0 # ojkelly 2012-02-12 09:37
These comments have a fixation on the five banks. The loans were originated by fraudsters, so called mortgage brokers etc. The banks biught the loans without due diligence because they could sell them quickly. But, the borrowers who were falsifying income have some small blame, do they not? Predatory lending on the poor is one thing, and usury caps have to be reintroduced, but letting soemeone walk who said they committed fraud because everyone was doing it, and the used car saleman said it was OK is another. It is perfectly legal to authorize soemone to sign your name to a document. It is not legal to notarize that signature unless the notarization recites that Joe Blow, who was authorized by Jane Blow to sign Jane Blow's name, did sign Jane Blow's name with her authority, etc. BFD. If you haven't paid your mortage, what is the injury to you that the owner of the mortgage authorized a robo signer to say that you had not paid. It is a problem of preventing fraud in the legal system by lenders, not a moral issue that the fraudsters should have their loans forgiven because they did not get away with it.
+2 # 666 2012-02-13 06:44
if it's too big to fail, then it's too big for private enterprise. nationalize it all. wipe the bad debts and reboot the system from the consumer up, not from the top down.
+1 # jky1291 2012-02-19 00:34
Corporate entities deemed "too big to fail" due to national security risk or economic impact, should be nationalized, before requiring tax payers' bailout, their management replaced by the appropriate department personnel, shareholders' interests unwound over a prudent timeframe, with future profits reducing the national debt. Corporations would be discouraged from becoming a national liability.
+2 # Valleyboy 2012-02-13 09:37
Matt, you're a normal guy like us except you actually understand this shit!
That's why I always read your articles.
Peace :-)

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