The latest trial balloon in the robosigning fraud cases is being pushed by Housing Secretary Shaun Donovan. It is as foolish and reckless as the mortgages underlying the crisis in the first place.
The terms which have been floated look something like this:
• $25 billion “fine”
• Up to another $17 billion used to reduce principal for homeowners facing foreclosure
• Fund for homeowners who were victims of improper foreclosure practices — 750,000 families receiving about $1,800 each.
• Principal reduction of $20,000;
• Halt all investigations into Robo-Signing;
• NO CRIMINAL PROSECUTIONS FOR ILLEGAL BANK ACTIVITIES
This deal manages to do just about everything wrong it possibly could:
1. The management of public companies are using shareholder monies to buy their ways out of criminal prosecution. They are stealing money from shareholders to give to AGs to prevent being sent to jail.
2.We still do not know who ordered the illegal robo-signing, the false notarizations, fraudulent written statements to courts, and perjury. Those persons need to be brought to justice.
3. Home owners who were victims of illegal foreclosures can easily access the courts to sue for damages — some of the more egregious cases have resulted in fast $1 million+ settlements;
4. Incidences of active servicemen on assignment being foreclosed upon in violation of law should generate very significant fines (I would let Special Forces handle it themselves, however they see fit, but I’m a bastard).
5. Principal reduction of $20,000 is meaningless; it solves nothing for the 25% of the homeowners with mortgages who are underwater. And, it rewards people who made an error in judgement when they bought more house than they could afford.
This proposed settlement confirms for me two additional things: First, it shows what happens when we bailout Banks — we see the same recklessness that led to their near denouement continue in other areas. Second, it incentivizes the government that bailed them out in the first place to protect their sunk costs — they tend to go easy on the banks to protect their “investments.”
Sorry , but this deal stinks all around