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View Diary: NY Atty. Gen. Schneiderman LOVES Today's Mortgage Fraud Deal. UPDATED x3 Liz Warren Likes it Too! (261 comments)

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  •  What Did Banks Get? (5+ / 0-)

    So banks did have to cough up $25B. It's not much compared to at least $775B the banks stole, and the couple thousand bucks direct to some of the people they stole from isn't much compared to how much was stolen. But it is $25B, which is a lot of money, even if it's not a huge amount in bankster terms.

    Now Schneiderman, Warren and Obama are telling us it's "just the beginning", that banks are still on the hook for all they did.

    So why did banks agree to the settlement? If it doesn't end any consequences to them, why are they spending $25B on it?

    This is fishy. I don't trust anyone's word on money this big, no matter how good they look, especially not in an election year where several of them are running on each other's coattails.

    What specifically did banks gain in the settlement, that was worth $25B for them to buy?

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Fri Feb 10, 2012 at 04:58:02 AM PST

    •  Good question, though I have no idea. (4+ / 0-)
      Recommended by:
      Deep Texan, hooper, semiot, Diogenes2008

      I will say this though:
      Remember at the tail end of the BP oil disaster the Administration got BP to agree to a 20 billion dollar restitution payment? Wingnuts were like, "it's a shakedown!", and, IIRC, ex-Kosack Fishgrease commented, "You bet your a$$ it's a shakedown, and it's beautiful." (paraphrased)
      This very much reminds me of that move. Cheers.

      I ♥ President Barack Obama.

      by ericlewis0 on Fri Feb 10, 2012 at 06:03:56 AM PST

      [ Parent ]

    •  The banks benefit from the settlement in several (1+ / 0-)
      Recommended by:
      Phoebe Loosinhouse

      the banks aren't paying $25 billion.  They are paying $5 billion.  The remainder, estimated as much as $30-40 billion (not just $25 billion), is going to come from loan write-downs and refinancing.
      important ways.

      1)  They are directly paying $5 billion when they were heavily responsible for as much as $700 billion in underwater mortgages.

      2) They get the abililty to readjust loans that they no longer own, i.e. securitized loans.  As these securities are owned by investors, including large amounts by pension funds and Freddie and Fannie, the additional losses beyond the initial $5 billion are going to come from our pensions, our 401Ks, and taxpayers, througs Freddie and Fannie.  

      3) This has the additional benefit for banks in that they can adjust primary mortgages BEFORE they adjust secondary liens such as home equity loans, which the banks DO own.  This makes their secondary liens worth something above the zero dollars they are worth now and will help with their insolvency problems.

      4) Fraud is hard to prove when hoards of corporate accountants and lawyers are hired to obfuscate the truth, especially for corporate leadership.  Robo-signing, i.e. FORGERY, has been very easy to prove as in involves low level employees who are willing to speak or don't know to protect the corporate line.  Not settling on robo-signing, which is relatively easy for lawsuits to move forward on, keeps the door open for discovery for more serious and widespread crimes by the corporate management and leadership.  It allows lawyers to obtain subpoenas, search warrants, and other documentation in their ongoing investigation of robo-signing that may lead to discovery and new information that could lead to additional prosecution.  By settling the robo-signing cases, the banks are smartly closing the door on the discovery process, making the additional lawsuits much harder to prosecute.  This may be the most important benefit to the banks in this whole deal.

      I'm sorry, but your reality simply doesn't fit my economic model.

      by Reframing the Debate on Fri Feb 10, 2012 at 07:32:26 AM PST

      [ Parent ]

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