Bank Bailout Day, February 9, 2012

I may or may not have more to say about this.

But I’m thinking of declaring this Bank Bailout Day, a holiday of the stature of President’s day.

Forty-nine states, every one but Oklahoma, as well as federal regulators, will participate in a foreclosure fraud settlement that will release the five biggest banks (Wells Fargo, Citi, Ally/GMAC, JPMorgan Chase and Bank of America) and their mortgage servicing units from liability for robo-signing and other forms of servicer abuse, in exchange for $25 billion in funding for legal aid, refinancing, short sales, restitution for wrongful foreclosures and principal reduction for underwater borrowers. The announcement will be made on Thursday.

[click through for the details]

And then there’s the settlement price: $25 billion, divided up several ways. $3 billion will go toward refinancing for current borrowers who are underwater on their loans, as well as short sales. $5 billion will go as a hard cash penalty to the states, which can use them for legal aid services, foreclosure mitigation programs, and ongoing fraud investigations in other areas (one official close to the talks feared that much of that hard cash payout will go in some Republican states toward filling their budget holes). The federal government will get a cash penalty as well. Out of that $5 billion, up to 750,000 borrowers wrongfully foreclosed upon will get a $1,800-$2,000 check if they sign up for it, the equivalent of saying to them “sorry we stole your home, here’s two months rent.”

If you read DDay’s full post (or if you’ve read anything here), it’s clear that the amount of fraud was astronomical: 60% failures in one case. And if you’ve read that far, you know this is a bail out, every much as the billions gifted to banks in September 2008 was a bailout.

The Administration wants to call this a settlement.

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27 Responses to Bank Bailout Day, February 9, 2012

Emptywheel Twitterverse
emptywheel @ddayen Rumsfeldesque
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emptywheel @jefffreyspies Right. And yet no one is doing the "here's how the press reported on major threat for 10 years and Congress ignored it"
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bmaz @emptywheel Were you hacked by 20 Committee?
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emptywheel @doryphorus They're making baby steps, but I'd be interested in horse race story abt how politics ignored until white people died in big #s
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emptywheel @farlanewastaken Our politics (esp GOP POTUS) has been a reality show for at least 9 years. One more summer will kill us all of a sudden?
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emptywheel Is it me or does reporting on opium epidemic never get credited back to journos who did earliest work on it?
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emptywheel @ErrataRob I think "everyone" overstates this. Set of people obsessed about this is relatively small.
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emptywheel @PaddyJ1325 Classroom furniture was American made back then. Now the Chinese prolly make it nuke-and-hack vulnerable.
33mreplyretweetfavorite
emptywheel @PaddyJ1325 Yup, posted that earlier. Now it has me wondering where they found an integrated elementary school in 1951.
35mreplyretweetfavorite
JimWhiteGNV So far, the only potential good I could see in a Trump presidency is that it would put impeachment back in the arsenal for Democrats.
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JimWhiteGNV RT @SenSanders: It's unacceptable that nearly 47 million Americans and 21% of kids are currently living below the poverty line.
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