Rating the Foreclosure Settlement

This week a $25 billion settlement was announced in which big banks pay up for a portion of their bad deeds in the home foreclosure crisis. Everyone is trying to determine whether this is a good deal or a bad deal.

Here is how I score it. This deal represents small progress on a small problem. Now it's time to make big progress on the big problem.

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The Federal government and the Attorneys General from 49 states have signed a deal with five major banks over charges of fraud, including reported acts of widespread perjury and forgery, in the so-called “robo-signing” scandal.

A few days ago we suggested that any deal be scored against five basic principles: openness, justice, restitution, deterrence, and reconciliation. It's clear that this deal falls short in every category. The best thing that can be said about it is that, thanks to a few tough holdouts led by New York AG Eric Schneiderman, it now allows additional civil and criminal investigations to proceed.

That's far from nothing, and it could be a big deal. But it will only be a big deal if the Administration stops coddling banks and devotes a lot more resources to helping homeowners and upholding justice.

Up to now, the fight has been to prevent the Administration from doing another cushy bank deal. Now that the door's been left open to further action, there's a new fight: to demand that they devote the Federal government's resources to investigating Wall Street crime.

Our own scoring of the agreement follows, based on the criteria we set out last week. Others may have a different opinion. But now that the deal's done, the way forward is clear. To paraphrase Joe Hill, don't mourn or celebrate: Organize. more »

The bank settlement of $25 billion over three years from five major banks for robo-signing forgeries is being hailed in Washington and more »

As Election Day nears, President Obama is regaining his populist mojo. His State of the Union speech was mostly pitch perfect, evoking core American themes of opportunity and optimism, and calling for “an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules.” more »

A Missouri grand jury handed down multiple felony indictments for foreclosure fraud on Monday. That's the same kind of crime being negotiated in nationwide settlement talks with America's big banks. If people can be indicted for doing it, why should bankers be allowed to write a check and walk away?

"Robo-signing" is the nickname that's been given to the practice of hiring large groups of inexperienced workers (they called them "Burger King Kids" at JPMorgan Chase) to file false statements with local courts in order to process foreclosures. In a typical "robo-signing," someone who sign a statement testifying that they had personally reviewed documents that prove the bank has title to a home that's being foreclosed - and might do that many times every hour. That's either perjury or forgery, depending on the way in which the robo-signing was done.

Forgery and perjury are serious crimes. It's an even more serious crime to ask others to do it for you.

Banks, and some friendly and lazy journalists, were quick to dismiss the whole issue as a "paperwork problem." If robo-signing is a "paperwork problem," then the St. Valentine's Day Massacre was a "misplaced bullet problem." more »

Once again we're hearing that a foreclosure fraud deal is about to be announced between major banks, the US government, and most or all of the states. We've heard that before, only to have the deadline pushed back so that holdout Attorneys General can be brought on board with the agreement.

Deal, or no deal? We're not sure, but it's certainly possible we'll hear something today, tonight, or tomorrow.

How will we know if it's a good deal for the American people? After all, this is an issue with a lot of moving parts. It includes all of the states and multiple agencies within the Federal government, and involves a multitude of allegations involving several different kinds of crime that come under different jurisdictions. Even the statutes of limitations are a moving target.

That doesn't mean we don't know enough to judge the deal, if and when it's announced. There are well-established facts to guide us, and the principles involved are clear. more »