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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Emptywheel Twitterverse
bmaz Hateful Eight looked killer; great writeup from Kim RT @SunsetGunShot Thoughts on The Hateful Eight live read http://t.co/JnaJqVs559
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bmaz @laRosalind The red is the best color on the Tesla. Would look even better on the Jaguar Musk STOLE his body design from.
32mreplyretweetfavorite
bmaz @BradMossEsq @SpyTalker At any rate, this is minuscule in relative scope, but helpful in showing there can be a deal cut.
36mreplyretweetfavorite
bmaz @BradMossEsq @SpyTalker Whether it is successful, or to what extent, who knows. But it is usable infer and precedent for fashioning the arg.
46mreplyretweetfavorite
bmaz @BradMossEsq @SpyTalker Irrespective, you get there by making arguments; I could sure fashion this and other cases into one.
47mreplyretweetfavorite
bmaz @SpyTalker That is a completely different criminal jurisdiction. Also, a defense atty has to try everything he can. I'd find this useful.
48mreplyretweetfavorite
bmaz @SpyTalker Is it a "winning" argument, no of course not; is it useful for mitigation, absolutely.
54mreplyretweetfavorite
bmaz @SpyTalker What displays is govt can move downward on such charges, there IS precedent; and there are many other instances too.
55mreplyretweetfavorite
bmaz @SpyTalker They are not in scope. But if you look at general overview, both involve removal of class info, both charge espionage etc.
57mreplyretweetfavorite
bmaz @SpyTalker also, stop calling me Shirley!
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bmaz @SpyTalker Mostly, yes. But it fits into an overall defense theme I've had in mind for a while as far as plea and sentencing.
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bmaz RT @MikeScarcella: Then: Six felony counts (three under Espionage Act). Now: One misdemeanor http://t.co/G2oKpbHl2h New charging doc: http:…
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February 2012
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