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[here below-- letter to Obama I just placed on all county legislators' desks here in Legislative Chambers on sixth floor of County Office Building at 22 Market St. in Poughkeepsie-- let's see how many of 'em sign on to this at tonight's full board mtg. of our County Legislature!...(email all 25 of us on this at countylegislators@co.dutchess.ny.us-- call White House at 202-456-1111!)...Joel]
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January 23, 2012
Dear President Obama:
After months of negotiation with big banks, it’s our understanding that you may soon announce a settlement that would let the banks off the hook for their role in the foreclosure crisis--- paying a tiny fraction of what's needed in exchange for blanket immunity from future lawsuits. Five banks— Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC)— would pay the federal government $25 billion. About $17 billion would be used to reduce the principal that some struggling homeowners owe, $5 billion more would be used for federal and state programs, and $3 billion would be used to help homeowners refinance at 5.25 percent. Civil immunity would be granted to the banks for any role in foreclosure fraud, and there would be no investigations.
Here are the hard facts about the housing crisis we face: 3.5 million Americans are homeless, 18.5 million homes sit vacant, and since 2007, more than 7.5 million homes have been foreclosed. Default and foreclosure rates are now several times higher than at any time since the Great Depression. Meanwhile, U.S. banks raked in $35 billion in profits last summer alone and are currently sitting on a historically high level of cash reserves of $1.64 trillion. The six biggest banks -- Bank of America, Wells Fargo, Citigroup, JP Morgan Chase, Goldman Sachs, and Morgan Stanley -- hold assets totaling $9.5 trillion; and together paid an income tax rate of only 11% in 2009 and 2010, far below the federally mandated 35% corporate tax rate.
Add up all the underwater homes in America, and there's an estimated $700 billion in negative equity in the country, according to a recent study. If banks fix what they broke and write down principals for all underwater mortgages, this would free up millions of people to pump billions of dollars back into local economies, create jobs, and ultimately generate revenue to help invest in things that will help our economy grow.
We, the undersigned members of the Dutchess County Legislature, urge you to stop and change the direction of this sweetheart deal. You should reject any deal that benefits the one percent and lets the big banks get away with their crimes. Instead, you should stand with the 99 percent and push for real accountability and a solution that will help millions of people in this country. If you are serious about solving this crisis, he must ensure that the banks must pay a minimum $300 billion in principal reduction for homeowners with underwater mortgages and/or restitution for foreclosed-on families. This is essential. Every effort to date to reboot the housing market has failed because it has not done the most essential thing -- actually reduce the massive debt load carried by homeowners.
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From http://www.commondreams.org/view/2012/01/23-5 ...
Published on Monday, January 23, 2012 by Common Dreams Obama's Choice on Housing: A Sweetheart Deal for the 1% or a Fair Deal for the 99%
by Van Jones and George Goehl
Rumor has it that as early as today, after months of negotiation with big banks, the White House may announce a settlement that would let the banks off the hook for their role in the foreclosure crisis -- paying a tiny fraction of what's needed in exchange for blanket immunity from future lawsuits.
(Daniel Goodman / Business Insider)
We hope these rumors are untrue.
President Obama has the ability to stop and change the direction of this sweetheart deal. He should reject any deal that benefits the one percent and lets the big banks get away with their crimes. Instead, the president should stand with the 99 percent and push for real accountability and a solution that will help millions of people in this country.
Here are the hard facts about the housing crisis we face:
•3.5 million Americans are homeless.
•18.5 million homes sit vacant.
•Since 2007, more than 7.5 million homes have been foreclosed.
Default and foreclosure rates are now several times higher than at any time since the Great Depression.
If President Obama is serious about solving this crisis, he must ensure three things:
First: The banks must pay a minimum $300 billion in principal reduction for homeowners with underwater mortgages and/or restitution for foreclosed-on families. This is essential. Every effort to date to reboot the housing market has failed because it has not done the most essential thing -- actually reduce the massive debt load carried by homeowners.
As it stands, the deal likely to be announced Monday would have the banks pay only $20 billion, an astonishingly small fraction of what's needed. Add up all the underwater homes in America, and there's an estimated $700 billion in negative equity in the country, according to a recent study. If banks fix what they broke and write down principals for all underwater mortgages, this would free up millions of people to pump billions of dollars back into local economies, create jobs, and ultimately generate revenue to help invest in things that will help our economy grow.
Second: There must be a full-fledged, full-blown investigation into Wall Street financial fraud by the Department of Justice. There should be a task force with the staff resources, the authority, and the explicit mission of seriously investigating fraudulent behavior in the way home mortgages were securitized.
Reports of the current deal suggest banks could walk away without any actual investigation into their role in the housing crisis.
Third: There should be no civil or criminal immunity for the banks from future lawsuits. That means there should be no broad release of claims in any current or future negotiation or settlement.
The banks must pay to help solve the crisis they played such a big role in creating. They can afford it.
U.S. banks raked in $35 billion in profits last summer alone and are currently sitting on a historically high level of cash reserves of $1.64 trillion. The six biggest banks -- Bank of America, Wells Fargo, Citigroup, JP Morgan Chase, Goldman Sachs, and Morgan Stanley -- hold assets totaling $9.5 trillion; and together paid an income tax rate of only 11% in 2009 and 2010, far below the federally mandated 35% corporate tax rate.
And that's not all. Despite their bleak performance this year, the nation's top six banks paid out $144 billion in bonuses and compensation for 2011, second only to the record $147 billion they paid out in 2007 at the height of the economic boom.
While banks enjoy record profits and the prospect of total immunity, millions of Americans are drowning in underwater mortgages.
Everyday people are already out front, fighting against the malfeasance of the banks; the White House should stand with them. Our national leaders need look no farther than Atlanta, GA, for an instructive profile in courage. Earlier this month, a community church in Dr. Martin Luther King's old neighborhood refused to be ignored. In 2008, a tornado devastated the historic, 108-year-old Higher Ground Empowerment Center church, and they were forced to take out a loan to cover repairs. The loan went underwater and became harder and harder to pay back. For nearly four years, the church asked the bank to modify their loan, but BB&T bank ignored them. Instead, last week, the bank started to evict the church. Sound familiar? Anyone with an underwater mortgage can tell you: banks these days just can't seem to treat their own customers with decency and manners.
However, after Occupy Atlanta staged a high-profile press conference, and 65,000 people signed a national petition by Rebuild the Dream, the church got BB&T bank to agree to modify their loan to something affordable and reasonable.
This happy ending is, unfortunately, the rare exception. BB&T, after being shaken to their senses (and shamed in the media), came to the table and did the right thing. But millions of homeowners have no way to stage protests and press conferences. Abuse, fraud, conflicts of interest, and lawlessness have been endemic at every stage of the mortgage origination and foreclosure process. This chain of misconduct by many of the nation's largest financial companies is at the root of the foreclosure avalanche and it's time to demand a course of action that will resolve the current crisis and create jobs in the future.
If these folks in Atlanta can show this level of courage in standing up to a big bank, then certainly Obama and state attorneys general can show the same courage.
The banks got their bailout. Now we need a strong and fair settlement to help Americans drowning in underwater mortgages.
Van Jones, President of Rebuild the Dream, is the founder and former president of Green for All and author of The Green Collar Economy. In 2009, he served as the green jobs advisor in the Obama White House. Van is currently a senior fellow at the Center For American Progress, and also holds a joint appointment at Princeton University, as a distinguished visiting fellow in both the Center for African American Studies and in the Program in Science, Technology and Environmental Policy at the Woodrow Wilson School of Public and International Affairs.
more Van Jones . George Goehl is the Executive Director of National People’s Action, a network of metropolitan and statewide community organizations dedicated to advancing economic and racial justice.
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From http://www.commondreams.org/headline/2012/01/23-2 ...
Published on Monday, January 23, 2012 by Common Dreams Critics of Mortgage Deal Press Obama, State AGs to Reject Big Bank Proposal
Progressives "Furious" at Emerging Details of Mortgage Deal
- Common Dreams staff
A long anticipated draft settlement between the nation's largest private mortgage lenders and US states has been announced, but it doesn't look good for industry critics who hoped the banking giants — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial —would suffer full investigations and payouts equal to the damage they caused to homeowners and the overall economy. The deal would still have to be accepted by the states.
Occupy Wall Street demonstrators block an entrance to a Bank of America building during a protest aimed to disrupt the city's financial district in San Francisco, California January 20, 2012. Weeks after their eviction from several area encampments, anti-Wall Street activists in San Francisco, including a former Pacific Stock Exchange president, are vowing to disrupt the city's financial district on Friday with a series of protests. (REUTERS/Stephen Lam) UPDATE: George Zornick writes at The Nation:
Obama Is on the Brink of a Settlement With the Big Banks—and Progressives Are Furious
For months, a massive federal settlement with big Wall Street banks over their role in the mortgage crisis has been in the offing. The rumored details have always given progressives heartburn: civil immunity, no investigations, inadequate help for homeowners and a small penalty for the banks. Now, on the eve President Obama’s State of the Union address—in which he plans to further advance a populist message against big money and income inequality—the deal may be here, and it’s every bit as ugly as progressives feared.
UPDATE: Wall Street Accountability Advocates to Obama: Stand Against a Sweetheart Deal With the Big Banks
In a statement, Robert L. Borosage, co-director of the Campaign for America’s Future, had this to say:
“Americans from across the political spectrum are angry that the Wall Street banks blew up the economy and got bailed out, while home owners and taxpayers were stuck with the bill.
“This is a fundamental question of justice and democracy. The law is respected only if it is enforced. Cutting a settlement with the banks before there is an investigation violates our basic sense of justice. No one who robbed a bank would be offered immunity, a modest fine and no admission of guilt – before there was an investigation into who stole the money and how much they took.
“And there is a fundamental question of whether the democracy can hold the wealthiest few accountable. Americans are increasingly cynical about politicians, believing that Wall Street can buy and sell Washington. This is destructive to our democracy. The President’s campaign will highlight his commitment to fair rules and a fair shot for every American. A sweetheart deal with the banks would be a glaring contradiction to that theme. Any deal, enforced over the objections of the most independent Attorneys General, like New York’s Eric Schneiderman, will fail that test.
“What the people want is clear: Investigation before immunity. Penalize the perpetrators, not their victims. Any settlement must have sufficient scope to deal with the scale of the problem. There is an estimated $700 billion of negative equity in underwater homes. While 1 million homeowners have been helped by efforts to save homeowners, 10.7 million homeowners are underwater and that does not count people who have already suffered foreclosure. The top six banks paid bonuses worth $140 billion last year alone, or $420 billion over the last three years. They hold assets of $9.5 trillion. The rumored settlement of $25 billion is barely a slap on the wrist.
“It is vital to this country that the banks are made accountable. It is vital that they do not see the law as simply a minor price of doing profitable business, a speed bump on the way to their bonuses.
As Simon Johnson writes at Politico, the Obama administration is in danger in pushing this failed policy at just the wrong time:
Robo-signing. (Illustration by Matt Mahurin)
The Obama administration has continued to press for a small-scale settlement of the alleged abuses around mortgage practices, repeating and compounding the mistake. The White House has routinely overlooked voters’ dismay at its favoring “too big to fail” banks. But given how its electoral base is now reacting, this time may be different — because a lack of enthusiasm among Democratic voters in swing states could cost President Barack Obama reelection.
The Obama administration’s pattern of behavior is unmistakable. Its first, and worst, decision was to keep the management and boards of big banks in place — despite the fact that these financial institutions had been driven into the ground by incompetence, greed and notoriously failed governance.
And AFL-CIO President, Richard Trumka, had this to say in response to reports about the deal:
Obama's campaign will highlight his commitment to fair rules and a fair shot for every American. A sweetheart deal with the banks would be a glaring contradiction to that theme. Any deal, enforced over the objections of the most independent Attorneys General, like New York’s Eric Schneiderman, will fail that test.
The economy is currently weighed down by $750 billion in negative home equity, so relief on a massive scale is needed to lift home values and stimulate the economy by increasing consumer demand. A comprehensive settlement must force banks to write down underwater mortgages. A sum significantly larger than the rumored $25 billion is needed for the economy to grow and create jobs.
Specifically, the administration must stand strong against the big banks and insist on:
1) A full and thorough investigation into problems tied to the residential mortgage-backed securities (RMBS) market, and
2) A guaranteed minimum amount of money set aside for reducing the mortgage principal of "underwater" homeowners in key states impacted by the foreclosure crisis.
This is an opportunity for the administration to demonstrate leadership and show that it has the political will to do what's right for homeowners and right for our economy.
Naked Capitalism's Yves Smith was indignant, pointing out that Obama is poised to use this deal to point towards "bank accountability" when it would, in her mind, be the opposite:
It’s yet another gambit designed to generate a campaign talking point while making the underlying problem worse.
Obama’s latest housing market chicanery should come as no surprise. As we discuss below, he will use the State of the Union address to announce a mortgage “settlement” by Federal regulators, and at least some state attorneys general. It’s yet another gambit designed to generate a campaign talking point while making the underlying problem worse.
The president seems to labor under the misapprehension that crimes by members of the elite must be swept under the rug because prosecuting them would destabilize the system. What he misses is that we are well past the point where coverups will work, and they may even blow up before the November elections. If nothing else, his settlement pact has a non-trivial Constitutional problem which the Republicans, if they are smart, will use to undermine the deal and discredit the Administration.
To add insult to injury, Obama is apparently going to present his belated Christmas present to the banking industry as a boon to ordinary citizens. He refused to appoint a real middle class advocate, Elizabeth Warren, to the Consumer Financial Protection Bureau, but he’s not above stealing her talking points.
***
Earlier today the Associated Press reported:
The nation's five largest mortgage lenders have agreed to overhaul their industry after deceptive foreclosure practices drove homeowners out of their homes, government officials said Monday.
A draft settlement between the banks and U.S. states has been sent to state officials for review.
Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement, which could be as high as $25 billion. About 750,000 Americans — about half of the households who might be eligible for assistance under the deal — will likely receive checks for about $1,800.
Others, however, would fret and perhaps re-phrase the AP report to read instead, "as low as $25 billion." Van Jones, of Rebuild the Dream, and George Goehl, of National People's Action, in an op-ed today, called for the settlement to be no less than "$300 billion," calling something closer to $20 billion "an astonishingly small fraction of what's needed."
Add up all the underwater homes in America, and there's an estimated $700 billion in negative equity in the country, according to a recent study. If banks fix what they broke and write down principals for all underwater mortgages, this would free up millions of people to pump billions of dollars back into local economies, create jobs, and ultimately generate revenue to help invest in things that will help our economy grow.
In addition, they say, the settlement must not preclude further investigations into the robo-signing debacle and the creation of the mortgage crisis that left millions underwater or out of their homes after what they claim were illegal foreclosures.
As the AP report continues:
Critics, including some members of Congress, say they want a thorough investigation of potentially illegal foreclosure practices before a settlement is hammered out.
"Wall Street again is trying to pass the buck. Instead of criminal prosecutions, we're talking about something that's not more than a slap on the wrist," said Sen. Sherrod Brown (D-Ohio), who has been critical of the proposed settlement.
Yves Smith, writing at Naked Capitalism, gets into the details of the proposal (though she acknowledges its impossible at this point to have a precise understanding of what the final deal looks like):
...previous leaks have indicated that the bulk of the supposed settlement would come not in actual monies paid by the banks (the cash portion has been rumored at under $5 billion) but in credits given for mortgage modifications for principal modifications. There are numerous reasons why that stinks. The biggest is that servicers will be able to count modifying first mortgages that were securitized toward the total. Since one of the cardinal rules of finance is to use other people’s money rather than your own, this provision virtually guarantees that investor-owned mortgages will be the ones to be restructured. Why is this a bad idea? The banks are NOT required to write down the second mortgages that they have on their books. This reverses the contractual hierarchy that junior lien-holders take losses before senior lenders. So this deal amounts to a transfer from pension funds and other fixed income investors to the banks, at the Administration’s instigation.
Another reason the modification provision is poorly structured is that the banks are given a dollar target to hit. That means they will focus on modifying the biggest mortgages. So help will go to a comparatively small number of grossly overhoused borrowers, no doubt reinforcing the “profligate borrower” meme.
And NPR reports this morning on another prominent government figure who has resisted appeasing the banks:
NY Attorney General Eric Schneiderman may reject a settlement with big banks over the robo-signing scandal. He says authorities have done too little to investigate the banks' role in the financial crisis. (Frank Franklin II/AP)
New York Attorney General Eric Schneiderman is raising objections, and may reject the settlement because he believes authorities have done too little to investigate the role of big banks in the financial crisis.
On a ride with the attorney general in his state-issued SUV, we pass the site of the Occupy Wall Street protests. Schneiderman didn't take part in the protests, but he agrees with some of the message.
"People aren't sure what happened, but they know that ... this was a man-made catastrophe, [and] that there are people who caused the bubble and the crash," he says.
This sentiment is echoed by Jones and Goehl, when they write, "The banks got their bailout. Now we need a strong and fair settlement to help Americans drowning in underwater mortgages."
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http://www.thenation.com/signupad/165806?destination=blog/165806/obama-brink-settlement-big-banks-and-progressives-are-furious
Obama Is on the Brink of a Settlement With the Big Banks—and Progressives Are Furious
George Zornick on January 23, 2012 - 1:07pm ET
For months, a massive federal settlement with big Wall Street banks over their role in the mortgage crisis has been in the offing. The rumored details have always given progressives heartburn: civil immunity, no investigations, inadequate help for homeowners and a small penalty for the banks. Now, on the eve President Obama’s State of the Union address—in which he plans to further advance a populist message against big money and income inequality—the deal may be here, and it’s every bit as ugly as progressives feared.
The Associated Press reports that a proposed deal could be announced within weeks. Five banks—Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC)—would pay the federal government $25 billion. About $17 billion would be used to reduce the principal that some struggling homeowners owe, $5 billion more would be used for future federal and state programs and $3 billion would be used to help homeowners refinance at 5.25 percent. Civil immunity would be granted to the banks for any role in foreclosure fraud, and there would be no investigations.
There are several reasons why this is could be a terrible deal. For one, the dollar amount is inadequate in relation to both the tremendous loss of wealth via mortgage fraud and the hefty balance sheets of these massive companies. Furthermore, the banks might be allowed to use investor money instead of their own funds—this makes the penalty even lower. Beyond all that: it’s extremely hard to justify the absence of investigations and punishment for mortgage fraud that was so widespread and so damaging to people’s lives.
There are also many other, more serious problems besides a lack of punitive action. The small amount of money—and the federal government’s recent inability to truly help underwater mortgage holders, of which there are currently 11 million—means that the victims of mortgage fraud might not see enough relief. And perhaps most importantly, with no real punishment for widespread damaging fraud, what are the incentives on Wall Street not to engage in similarly destructive practices once again?
On a major conference call this morning, many leading progressive voices inside Washington and out blasted the deal.
Senator Sherrod Brown of Ohio characterized the rumored deal as “not much more than a slap on the wrist,” and added that while banks were always know to be too big to fail, they were now apparently “too big to jail.”
“When laws are broken there need to be full investigations,” Brown said. “Wall Street should not get another bailout.”
Brown urged Obama to reject the deal and order investigations into the banks’ practices immediately. Simon Johnson, an economist at MIT and well-known progressive voice, also called for no deal and immediate investigations.
“This is not just the right thing do, and not just good politics, it’s good economics,” Johnson said. “What’s at stake here is the rule of law.”
Robert Borosage, co-director of the Campaign for America’s Future, blasted the rumored deal as well and urged the administration to consider the political optics.
“No one who robbed a bank would be offered immunity, a modest fine, and no admission of guilt before there was an investigation,” Borosage said. “Americans are increasingly cynical with the ability of democracy to deal with special interests.
“The president’s campaign will sensibly highlight his commitment to fairer rules,” he continued. “Needless to say, a sweetheart deal with the banks will contrast with that.”
As we noted last week, many progressive groups have begun a massive petition drive to push back against the settlement and demand fair investigations. Moreover, attorneys general in California, New York, Delaware, Nevada and Massachusetts have previously said they won’t be a part of any deal that offers civil immunity.
So the deal is far from done—but it’s certainly moving towards an undesirable conclusion. We’ll have plenty more in this space all week.
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