The most dangerous political agenda on the horizon today is the sweetheart deal that the banks are about to get in the foreclosure settlement package. If this deal goes through it will have widespread economic, social and political consequences that will be felt by some for generations. The rich will win big time and anyone who is vulnerable will be hurt.
Let your State AG, your elected officials and the Obama administration know you are furious about this deal and you will hold them accountable if it happens.
The clear winners are the banks, who cash out their criminal and legal liabilities for less than three cents on the dollar.
The clear losers are those who lost their homes in a nation-wide mortgage fraud scandal. They will only get 1500-2000 dollar cash payments for permanent damage to their economic lives.
What did the bankers do that required this 'settlement'?What price will they pay? About 25 billion dollars in 'soft money'. So you understand how little money this is, consider this: homeowners owe the mortgage industry 700 billion dollars more than their houses are collectively worth.
• Defrauded tens of millions of homeowners
• Stole millions of homes
• Bankrupted millions of people through predatory fees, no-win loans, etc.
• Unilaterally privatized national property records
• Screwed up national property records until nobody knew who owned what
• Systematic document forgery to defraud millions of people out of their homes
• Caused the worst economic crisis & meltdown since the Great Depression
• Industry-wide conspiracy to defraud investors, causing economic collapse
• Destroyed towns and cities
• Cost millions of people their jobs
• Held the world economy hostage, until they were bailed out for their crimes
So the banks are cashing out of this problem for less than three cents on the dollar.
What will those who saw their homes stolen by the bankers get? 1500-2000 dollars.
I think that says it all.
But it doesn't. It gets worse.
Read this diary, do your homework, start asking some very serious questions and tell your elected officials that this deal will hurt the economy, let criminals off the hook and provide no justice for those who were robbed. If we let this deal through we will be screwed economically and the bankers will fuck us again.
Its hard to pin down the details on a moving target, and I haven't seen more than the outline of the deal. While there has been tentative agreement, they haven't signed the document.
Terms of the Deal
As I understand it, the banks are committing 25 billion dollars in the deal. Some of that money will be cash payments to those who lost their homes. Several million Americans will get 1500-2000 dollars.
That bears repeating: those who lost their homes - often in tandem with losing their jobs - get 1500-2000 dollars for the likely, permanent economic destruction of their lives and potential permanent poverty of their children.
To use legal parlance, they have hardly been 'made whole'.
Some will go to the states. I can't speak to those details, but anyone who ever followed the money trail of lottery and cigarette industry settlement funds will fall over laughing if any politician claims that money will go to the victims of banker criminality or to solving the problems they caused.
But this is just window dressing, most of it will come in the form of modified loans. So the money is 'soft' and exists only as the collective value of all American mortgages.
A Drop in the Bucket
So you understand the scale of the problem fully, US homeowners owe 700 billion more on their mortgages than their properties are worth.
So, even if the WHOLE 25 billion went toward reconciling the gap between mortgage and property values, no more than 3% of that gap would be assumed by the banks.
But when this sum is discounted by the money paid to defrauded former homeowners or the states, it is likely that only 1% of the debt/value gap will be addressed.
The Damage it Will Do
The real damage will come when - as financial industry analysists expect - foreclosures will dramatically rise, if the banks feel they have settled their liabilities. This will further wreak havoc on local and national economies.
Property values will plummet as discounted housing hits the market, so all you lucky folks who still own your homes will see your property values go down.
Some of you will pay more for your mortgage than your property is worth and the 'debt gap' between property values and property debt will rise. Adding more stress to the economy, with all the cracks and damage happening at the bottom of the economy.
What do you think will happen next?
There will be a huge wave of foreclosures, collapsing home values and undermining local economies and the recovery. This, in turn, will lead to another wave of foreclosures and the banks will be in a better position to capitalize again on the crisis they create.
But this is just ledgerbook stuff.
Banker Immunity and the Next Wave of Economic Crisis
This deal also gives bankers immunities, demands little in commitment, undermines home security and once again, throws the victims of the worst economic crisis since the Great Depression under a bus. This would be a disgusting deal if it were peddled by Republicans. But for a Democrat, this is political stupidity to boot.
If you thought the public was angry in the 2010 election, imagine their mood in Nov. 2012, if the foreclosure crisis has gotten worse and knocked the phantasmagorical 'economic recovery' off its axis!
We already have thousands of cities and towns trapped in a spiraling cauldron of joblessness, exploding foreclosures and massive warehousing of residential, commercial and office properties. This deal will explode the foreclosure crisis and its attendant abandoned housing, joblessness and local economic crises.
It will ripple throughout all household economies where the primary economic asset is the home that they own and owe to the bank.
How much will that add to the economic recovery? If your calculus doesn't produce negative numbers, you need new economic equations.
To add insult to injury, this commitment from the banks is about 1/2% of the bailout given to these banks by the Feds and the US government since they crashed the economy in 2007-2008.
This deal will cause economic harm to everyone, except the bankers and their co-conspirators in what might be the worst banking scandal in human history.
Post-Meltdown Banker Behavior
Lest there is anyone left on the planet who still believes that the behavior of our current crop of financial elites is going to change, let's consider what they've been doing since the Federal Reserve, the US government and countries all over the world poured trillions into their coffers and saved the rich while they abandoned the poor.
In the three years since we bailed the banks out with trillions of dollars, they:
• Continue to peddle dubious derivatives and ‘financial instruments’
• Used taxpayer dollars for massive bonuses to those who crashed the economy
• Shook down European countries for their debt, forcing pro-bank reforms
• Held national, state and local governments hostages to their debt
• Warehoused millions of residential & commercial properties
• Colluded with developers thru lending practices to consolidate property
• Starved economic base, by refusing to lend & predatory banking practices
• Continued practices of predatory fees, innovated mortgage games, etc.
• Continued shady accounting tactics to hide problems from investors & regulators.
In town after town, homes are being abandoned, plunging them into deep economic crisis and neglect. Bank seizures destroy municipal coffers, collapse neighboring home values, and indirectly destroy jobs. Indeed, they have destroyed whole economies, when their predatory practices are judged across all activities and the direct economic consequences are considered.
Let us not forget that the people who crashed the economy 3 years ago, are the same folks who rewrote the structures of our economy over the past 30 years, that collapsed wages and working conditions, outsourced jobs and buried us all in debt.
And yeah, some of these people are in the Obama administration, or were appointed by him to pilot the recovery.
The major banks and financial institutions caused the worst economic disaster since the Great Depression and this deal absolves them of responsibility for their criminal behavior for mere pennies on the dollar and mostly with 'soft money'.
We've bailed them out for trillions of dollars and they continued to shave the edges of the law, failed honor their agreements with homeowners or the federal government in good faith, continued their loan-sharking, con-artist ways with devastating consequences for local, national and international economies.
And for three cents on the dollar and chum change for their victims, they will be getting off the hook. Why are we letting this happen?
Take Political Action
This deal will make the economic crisis worse at the local level, cause real and permanent damage to anyone caught in this crisis, and have knock-on affects throughout the social base. These problems will become more visible as we move toward election.
Not only is this a morally reprehensible deal, a potential threat to the economy and another bailout for the bankers, its political stupidity to boot. What kind of mood to you think the electoral base of this party will be in, if foreclosures are rising at election time? What happened in 2010?
Why would anyone who lost their home during this crisis vote for the political party responsible for their losses? And who do you think will be blamed when foreclosures are peaking around election time?
Call your state attorney general, call the white house and every elected official you can think of, and tell them you are in no mood for bank bailouts or any deal that lets these criminals off the hook or gives them any more power in our economy than they already have.
This deal needs to die a quick and ugly death or we will be grave economic and socio-political trouble by the end of the year.