Are you satisfied with the big banks' $8.5 billion settlement?
- No, this settlement is merely an out for the banks to hide the true extent of their foreclosure abuses. (96%, 190 Votes)
- Yes, this settlement is a fair trade for a stop to sweeping federal review. (4%, 7 Votes)
Total Voters: 197
The top 10 mortgage servicers in the U.S. have reached an $8.5 billion settlement with the Federal Reserve (the Fed) and the Office of the Comptroller of the Currency (OCC). The settlement will put a halt to the sweeping federal review of lender foreclosure abuses.
At its inception, the review had three specific goals:
- identify harmed borrowers;
- compensate them for their losses; and
- fix the broken aspects of the mortgage servicing system.
Regulators claim the settlement was reached since it meets the review’s original objectives.
The big banks will pay as much as $125,000 to individual borrowers whose homes were in foreclosure in 2009 and 2010. In addition to direct payouts, the banks will also provide $5.2 billion to assist borrowers with mortgage modifications and principal forgiveness.
Since the settlement will eliminate the foreclosure review before completion, Congress will not be provided a full report detailing specific foreclosure abuses perpetrated by the banks.
first tuesday insight
At this point, all we can do is shake our heads.
Of course, we’re not surprised. However, this settlement is particularly shameful since it keeps our top federal regulators from doing their most important job: identifying abuse and stopping it.
Hopefully everyone watching realizes that these settlements amount to one, simple truth: the banks are paying-off the government and the taxpayer to avoid public reproach and continue with business as usual.
For those who still believe that billion dollar settlements send a powerful punitive message, let us put the whole thing in perspective. The settlement totals $8.5 billion proportionally split between 10 banks. Just one of the banks involved, JPMorgan Chase, reported record profits in Q3 2012 of $5.3 billion. This is one quarter of one bank’s annual profits.
In other words, the cost incurred as a result of the settlement is nominal — considered to be marginal operating losses. That is, losses incurred in order to operate outside the law.
re: “Ten banks to pay $8.5 billion to settle foreclosure abuse review” from the Los Angeles Times