The John Walsh-Liz Warren-Investors & Homeowners Cage Fight

I noted the other day that the Administration was floating a ridiculously small $20 billion Get out of Jail Free plan to excuse the banksters fort their foreclosure fraud. Apparently, the banksters think that $20 billion is just a “crazy figure” that will never be imposed. The actual homeowners affected by the banksters’ crime, however, believe it is “chump change.” From a press release from the CrimeShouldn’tPay effort:

“We need more than just another slap on the wrist.  Home prices have plummeted by $9 trillion over the last four years because of the massive fraud that the big banks perpetrated on the American people. $20 billion is chump change, especially when you divide that amongst the nation’s 14 largest banks,” says Gina Gates from San Jose, CA who lost her home fraudulently to JP Morgan Chase.  “This cannot be more ‘business as usual’ for the nation’s biggest banks – break the law, make hundreds of billions of dollars doing so, and then pay a small percentage of their bounty in fines while leaving everyone else suffering the consequence of their actions. No, this time, the punishment must fit the crime. The big banks must pay commensurate to the pain and suffering they’ve caused so many people.”

But the truth behind the figure is–as Shahien Nasiripour reports–actually that Elizabeth Warren and Office of the Comptroller of the Currency, headed by John Walsh, are fighting over what an appropriate remedy might be. Warren, along with the FDIC and FHA, believes a still-too-paltry $25-$30 billion penalty is in order.

Officials at the Federal Deposit Insurance Corporation, the Federal Housing Administration, and those now creating a fledgling consumer financial protection bureau are inclined to seek as much as $30 billion in fines, making those funds available to provide relief to borrowers at risk of losing their homes.

[snip]

Elizabeth Warren of the Consumer Financial Protection Bureau has floated a figure of about $25 billion for a unified settlement, according to people familiar with the situation.

But OCC–which has a long history of protecting banksters from actual regulation–wants just a $5 billion penalty with no principal reductions.

The Office of the Comptroller of the Currency, which oversees the nation’s largest banks, intends to pursue its own settlement with lenders, a track distinct from the talks conducted by its federal counterparts, the sources said. The OCC, eager to protect major banks from expensive fines, is seeking to limit the terms to $5 billion, while also ensuring that lenders retain wide latitude in how to administer relief for homeowners, the sources said.

[snip]

Housing experts assert that mortgage companies have been largely unwilling to shrink principal balances on first mortgages, because they understand that that this would trigger huge losses on the second mortgages they own themselves.

The OCC is opposing a settlement that would entail large-scale write-downs of mortgages precisely because of concerns about this very scenario, the sources said.

Problem is, the OCC, as the banskters’ primary regulator enabler, has control of the key documents demonstrating the banksters’ fraud.

The OCC has already begun a process toward resolving the allegations lodged against the banks that it regulates, recently sending draft orders detailing improper and illegal practices that the firms would have to end, according to people familiar with the matter. The draft orders, which are not public, have been shared with some federal agencies, the sources said.

One source said the OCC was effectively aiding the banks in delivering the orders by handing them valuable information about its findings, thus allowing mortgage companies more time to marshal a defense.

The OCC has also shown reluctance to share its detailed findings and documents with other federal regulators, said people familiar with its actions. As the primary regulator for the nation’s largest lenders, the OCC is privy to more inside information than its counterparts, giving it substantial power in shaping the contours of any negotiation.

Of course, this entire discussion leaves out two key players: the homeowners, whose legal recourse against banksters for fraudulent practices would presumably be limited by any settlement. And the investors, who would prefer big principal reductions to the foreclosures that the big banks seem intent on forcing.

And meanwhile, the housing market continues to drag down the economy. And the folks in DC seem more focused on cutting benefits for the old and the infirm instead of fixing the real problem with our economy.

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  1. bmaz says:

    If Liz Warren cannot have the “direct ear of Obama” enough to get something positive done on this, then that whole “Oh she will be such a wonderful and positive thing in the Administration” bit was every ounce the crock of shit I said it was.

    • econobuzz says:

      …then that whole “Oh she will be such a wonderful and positive thing in the Administration” bit was every ounce the crock of shit I said it was.

      Everyone who works for Barry was always an asshole to begin with or has to become an asshole to loyally serve him. Warren is no exception.

      • BeachPopulist says:

        …then that whole “Oh she will be such a wonderful and positive thing in the Administration” bit was every ounce the crock of shit I said it was.

        Everyone who works for Barry was always an asshole to begin with or has to become an asshole to loyally serve him. Warren is no exception.

        I generally agree with this but in Warren’s case I tend to think that she clung to the delusion that she could affect things to some degree. Of course, we all know that the “degree” would be insignificant. Wonder if they threatened that he job at Harvard wouldn’t be there if she didn’t play ball?

        • econobuzz says:

          When you take a job working for an arrogant, incompetent, coward like Obama, you have thrown away any influence you might have on events. She is IRRELEVANT.

          • econobuzz says:

            David Brooks has more influence on Obama than Liz Warren. Bill O’Reilly does also. Liz Warren has NO impact.

  2. klynn says:

    I am so sorry to OT such a great post EW.

    If none of you have seen this, please, please watch.

    From the New York Times: “…Debate had gone on for 60 hours and 15 Democrats were still waiting to speak when the vote started around 1 a.m. Friday. Speaker Pro Tem Bill Kramer, R-Waukesha, opened the roll and closed it within seconds.

    Democrats looked around, bewildered. Only 13 of the 38 Democratic members managed to vote in time.

    Republicans immediately marched out of the chamber in single file. The Democrats rushed at them, pumping their fists and shouting “Shame!” and “Cowards!”

    The Republicans walked past them without responding.

    Son-of-klynn noted the rep who yelled at the GOP, “This is just like Nazi Germany.”

    Son-of-klynn just finished some extensive research on the Nazi movement and agreed with the rep who shouted the observation.

    The “lockstep” exiting in the one video is chilling.

  3. earlofhuntingdon says:

    How ironic that the first African American president should institute a kind of reverse affirmative action for bankers that goes out of its way not to protect ordinary working Americans.

    Mr. Obama’s hiring of Ms. Warren is all affirmation and no action. In crudest terms familiar to those who frequent the executive washroom, she’s the lovely lady at the front desk. Her presence is meant to assure customers who walk in the door that the place is not a denizen of thieves huddled in dark, dank, smoke-filled rooms, chomping on their Cubans and wondering what next they can plunder.

    We’re not in Kansas any more and Toto is on the menu.

  4. rosalind says:

    and the marker has been put down: the “settlement” will be between $5 billion and $20 billion, which brings us to, what, $12.5 billion?

    The LATimes spreads the hackery, where they insert that most morally bankrupt adjective in their first sentence: “Federal and state officials are analyzing proposals that could help people who lost their homes or missed mortgage payments as a key part in resolving a multibillion-dollar case over botched foreclosure paperwork.”

    the rest reads like a mortgage banker wet dream, with a healthy dose of false equivalencies. key graph:

    “Competing agendas of different government agencies and potential pushback from mortgage servicers could force separate settlements and delay an overall resolution more than a month, the officials said. Otherwise, a broad settlement would be reached within weeks, they said.”

    gee, who’s missing from that picture? oh yeah, the homeowners who’ve been shafted from here to tomorrow and whose rapidly emptying pockets are gonna get picked for one more pay-off of the billionaires and millionaires who’ve crushed our economy and our states and our cities and our way of life.

    bmaz is right. that liz warren is participating in this farce by setting the “high” of this effed up “negotiation”…

    • earlofhuntingdon says:

      I think bmaz’s comment was directed at Obama for hiring her for her image, to garner support or to receive less harsh criticism because of it, when he had no intention of listening to her or adopting her advice.

      Obama is where the buck stops here. Ms. Warren is advocating for $25-30 billion package. That seems small potatoes compared to the harm; but she’s very much at the high end. The OCC is arguing for $0-5 billion, which is less than a year’s bonus payments to the crews at the top five banks.

      This is another massive bail-out for the banksters, another bail-out that would be paid by the least financially well-off Americans. It just doesn’t come in the form of direct payments. It comes in the form of an attempt to remove enormous liabilities/losses from these banks’ books. That liability stems from the harm they have directly caused, harm that is well into the hundreds of billions, if not over a trillion dollars.

  5. MarkH says:

    I’m confused by this article. Is the money to be paid by bankers to get legislation passed which will protect ‘their’ property or is it to be paid by gov’t to bankers to get the bad mortgages at pennies on the dollar?

    What’s the deal and who’s behind this?

    If it’s needed the Pres. can order the OCC to turn over all it has to Ms. Warren. But, what’s this deal-making going on?

  6. b2020 says:

    Hear, hear.

    I have made this point since the day I read Scott Horton’s Ode to Mukasey – whatever the past merits, abilities, ethics of an individual, it does not predict the future, at the very least with respect to the ability to deliver results ** if measured against the fact of being nominated for a position by a Bad Actor **. Whatever Mukasey might or might not have been before his selection, the mere fact of Bush selecting him predicted that he would be either ineffectual, or had been deemed sufficiently corrupt.

    To join an administration 43 or 44 is to decide to be publicly associated with a cesspool. Don Quixote himself would not get a pass on this one. To continue to serve within such an administration after getting inside information on its dysfunction and malfeasance is to join the company of the Colin Powell’s of the world, one of the worst of opportunistic apparatchiks since cutting his teeth on the My Lai “investigations”.

    Nominations, confirmations, acceptance are political acts and political messages, and Bygones Habeas Obama has tainted an entire generation of “progressive heroes” through their willingness to be – and continue to be -associated with him and his policies.

    One key defect of the US democratic system is that The People are no longer willing – maybe no longer able – to ostracize the worst offenders against the principles on which the nation was founded. The most corrupt politician can count on wealth and comfortable status as a retainer of the elites, and The People are willing to serve and suffer anybody who is able to pay his way. Hence, creatures like Rice and Powell still count as “assets” for advertising-financed TV channels dependent on ratings, and actors like Clinton, Bush and Obama will remain a “presence” for the rest of their lives, selling automatic biographies, holding forth at 1K/minute speech engagements, and serving as figureheads for various “relief” efforts – when the proper response would be to spit on the sidewalk and cross to the other side of the road.

  7. b2020 says:

    Interesting footnote:

    http://firedoglake.com/2011/02/25/late-night-youll-never-eat-dinner-in-this-town-again/
    http://mymindstain.blogspot.com/2011/02/scott-walker-asked-to-leave-local.html
    http://www.merchantmadison.com/

    I have no idea of the veracity of this, but between the “Koch Up” call and this, I would like to point out that one can extend the idea behind Wikileaks – disrupting the internal communication of elite conspiracy by disclosure – to more general bottom-up concepts of disinformation. For an example, see
    http://theyesmen.org/hijinks/bbcbhopal

    So maybe politicians no longer suffer the public shunning they deserve, but they might occasionally suffer the rumor of it…

  8. PeasantParty says:

    Obama’s HAMP program was a fail, and it didn’t even ask the banks to contribute to the funding. Liz Warren has every right to ask for that and more. If one member, Walsh of the OCC can hold her up on this, then she needs to go back and ask for more. Each time they deny her requests, then she should raise them until she has to bypass the one OCC member in order to operate.

    We could all go on a letter writing spree but it would be ignored. I hope Warren proves she is more determined and fiesty than these old fat men trying to keep the banks from harm.

  9. Sharkbabe says:

    Thugs and shakedown pricks have always and forever tyrannized the mass of humanity. They’re barely even bothering with the veneer of civilized anything here anymore.

    This is what happens when you remove every last law from “profit” seeking enterprise.

    Hopefully Liz Warren will save herself by at least making a proper splashy “fuck you, i tried” exit from this burning whorehouse.

    • liberalarts says:

      There’s a petition up at DKos to draft Warren for a MA senate run. Almost as if the plan was always to make her completely disappear.

  10. coach1640280 says:

    Presidential Overload

    Tax cuts and bailouts to the wealthy elite are Obama presidential overload. Bush Sr. “no new taxes” was presidential overload. Monica was Clinton overload. 911 was Bush Jr. overload. There is more history, civil war and Lincoln, WWI and Wilson, WWII and Roosevelt, Vietnam and Johnson, water gate and Nixon, and assassinations. Every president, sometime in their term, experiences presidential overload. There is a long bloody history of this phenomena getting worse in recent years.

    This is because America’s presidency is an elected monarchy. Monarchies, elected or not, eventually overload the monarch and fail. This is why democracy was invented.

    Where is Obama’s backup? Where are Obama’s equals? Where are his supporters. Where are his troops? Must the president always be the end-all, solve-all, and super person? Is the president “batman”. Must he single handedly solve gotham’s crime problems? The standard is set too super high. This is why monarchs fail. This is why elected oligarchy is superior to elected monarchy. One is a lonely number and single presidential overload unavoidable.

    Remind me, never ever ever to run for president until there are eight other elected presidents to assist and support in trying times, difficult issues, and circumstances. Government is a team sport, not golf.

    When service in a restaurant suffers, more waiters are needed. When fire breaks out everywhere, more fire fighters are needed. When crime becomes rampant, more police are needed. When democracy morphs to elected oligarchy and America lacks governance, send help to the few surviving democratic representatives. More representatives are needed. More presidents are needed. The antidote to corruption of power is disbursement of power. Democracy disburses power. Step it up, America. Be proactive. Check out plan-b.

    Citizen is coach to team democracy. Coach is responsible for success. It’s your call, coach.

    http://middleamericareformparty.wordpress.com/about/
    http://middleamericareformparty.wordpress.com/2010/12/22/coach1640280-us-constitution-plan-b/

    Seeking presidential candidate (for one of 9 elected executive branch presidents) 2016
    http://twitter.com/#!/_MARP

  11. captjjyossarian says:

    Yeah, it’s a drop in the bucket.

    If we responded by the same methods as the bankers, we’d be sending Moose and Rocco to help Jamie and Lloyd find their wallets.

    I don’t think we’re dealing with banks. Rather, it seems like we’re dealing with mafia operations that label themselves as banks. There’s no reforming that, just shut em down.

    • PJEvans says:

      There’s a section in Shockwave Rider, by John Brunner, where they’re talking about the government and its handling of the situation after a major disaster. One of the characters says something about when you can’t tell the government and the gangs apart by looking at them, and another says that it reminds them of the cartoon of hunters in the forest, where you suddenly realize that some of the trees look an awful lot like legs….

  12. Bobster33 says:

    Crooks and Liars has a post whereby the AZ legislature is making a difference. The legislature requires foreclosing banks to produce full chain of Title prior to foreclosing. I suspect banks will be moving fast to quash this.