Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement”
http://www.nakedcapitalism.com/2012/01/obama-to-give-banks-mortgage-get-out-of-jail-almost-free-card-pressures-state-attorneys-generals-to-capitulate.htmlObama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement”
Monday, January 23, 2012
by Yves Smith
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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 destablize 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.
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The story did not outline terms, but 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 lienholders 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.
But those criticisms assume two other things: that the program is actually implemented. The experience with past consent decrees in the mortgage space is that the servicers get a legal get out of jail free card, a release, and do not hold up their end of the deal. Similarly, we’ve seen bank executives swear in front of Congress in late 2010 that they had stopped robosigning, which turned out to be a brazen lie. So here, odds favor that servicers will pretty much do nothing except perhaps be given credit for mortgage modifications they would have made anyhow.
more...
= new reply since forum marked as read
like your beloved Sullivan.
hyperbole. 
That seems to be the only response these days from a certain front.
If Brown is talking about this, I am listening.
As usual, some folks here have glommed onto a prediction/accusation to 
-spew. All kinds of proposals are being bandied about. Anyone posting terms of a 50-state settlement is not to be taken seriously because there is no deal, not yet.
That "pure rudeness" is what you're making of it, and then, after a long dissertation why you feel so appalled by the "hmmmmm" expression, you end your own post with it. 
more nonsense by the desperate.
When you look at statements right from the OP (and article) such as:
And this:
And this:
you have essentially an article full of assumptions, speculation, and outright tabloid-style pseudo-journalism.
The mortgage crisis has been a nightmarish thing and the states involved in dealing with it (with their own myriad of laws and regulations, let alone with their own partisanship in play), doesn't make this easy to deal with.
However this whole dissertation loses all credibility with nonsensical attack terms such as "Obama script". It comes off as an angry hit piece that some on DU choose to embrace to justify their virulent hatred for the current administration.
Sorry but I don't buy it.
Absolutely not - at least not the "lay pundits". One of the biggest reasons why single-payer, let alone a Public Option failed was because the media decided to describe, in detail, the entire sausage-making process as it happened.... I expect that many may think that this would be in the spirit of "transparency", but the reality is (for anyone who has done negotiations), all it does is harden the positions from either side and you fail to get an agreement. The assumption being that if you don't do such-and-such, then you "lose". And the public watching all this got disgusted and to this day, are disgusted with the result. With any "settlement" or piece of legislation, there is alot of legalese that must be factored in so that the result passes muster with the Constitution, existing laws/regulations, and precedents.
I think the administration has been wanting to announce the reform of MANY unifinished intitiatives - No Child Left Behind repeal, Immigration, etc., etc., but it seems that every year, some catastrophe takes precious months away from being able to focus on the agenda (e.g., catastrophic oil spills, earthquakes, tsunamis, global upheavals, an intransigent congress, etc), and some continue to crack the whip to do more regardless.
The previous administration left so many booby-traps and gutted the government so, that it's sad that when trying to even staff up departments like HUD or DOJ (AND get these folks trained) to handle all the criminality that needs to be investigated, the administration is still blamed for not doing more with nothing.
It's also sad that DU continues to leave Congress out of the equation. Seems the only names mentioned are Bernie Sanders or in this case, Sherrod Brown. Occassionally Barney Frank's name comes up from the House side... But where is mention of the head of said Banking, Housing, Urban Affairs Committee (a Democrat who is from a state where banks seek haven)?
Oh well. 
I don't know if you have ever been in negotiations on anything (I had for a number of years as a local President), but the assumptions of something "being taken off the table" or being "negotiated away" is often something that may have happened (even strategically) at a certain moment in time (snapshot) and then these things may come back again.
The key is not just having "stakeholders" but having knowledgeable ones. I.e., the constant speculation about what is going on in a negotiation by those not directly involved or aware of regs, etc. or even those who come in with an "all or nothing" frame of mind, can be, and has often proven to be, counter-productive.
In the case of PPACA, the media obfuscated the process by focussing on various iterations of what they termed "the bill" (as if it were what was "final"
- but the version initially being discussed was merely one from a single chamber of congress.... And they completely ignored the fact that the same sort of sausage-making had to happen within the other chamber of congress, and then finally the 2 bills had to be reconcilled, leading to more sausage-making. So all that summer, there was a media fiasco about a "healthcare bill" that was in reality, not going to be anything close to final until it passed through various other processes. The same seems to be happening here where what gets reported is as if this is "final" (and then next week it may change and the hysteria returns to the next "final" version of a settlement, and so on).
Negotiation is an art and not a hard-line "my way or the highway" if you want to move towards a goal. The histrionics surrounding these types of agreements aren't helpful.
May not be able to reply back after this right away as I need to head out... 
So according to you, the fewer the number of people who are involved in the process,
and the more secret and opaque the process,
the better?
The People should just Shut Up and wait for Our Betters to make the important decisions,
and then simply abide by their decisions after the fact?
I don't think that is the way democracy works.
by the corporate media (particularly Max Baucus swaggering around like a peacock), and look where it got us.
Again, there's sadly a lack of knowledge of negotiations and how such is normally handled. Basically each side gets together with their own (which can include as many stakeholders as they want), and designees serve as representatives of their side's point of view. You can't have everyone in there at one time lobbing stuff at each other, otherwise you'll never get done.
Not sure why you made that leap of assumption. But I'm afraid that you can't have 300,000,000 people in a room trying to negotiate agreements either. But you knew that, right?
ya have to see DU's favorite Al Gore for more on that.
and it'll be made clearer to you. 
I stopped trying to kick that ball a long time ago.
Talk about frigging hit and run!
I know I’m supposed to love Eric Schneiderman, the pugilistic attorney general of New York who has spent much of the past two months beating up on the banks. Everyone from the president (who chose a JPMorgan Chase executive to serve as his chief of staff, for heaven’s sake) on down has seemed willing to give them a pass. But there’s Schneiderman, demanding that the banks pay several pounds of flesh for the pain they’ve caused. Over the past few weeks, he’s been the subject of sweet-smelling profiles in The New York Times and Politico (“America’s Most Powerful Liberal?" ; Rolling Stone’s Matt Taibbi and Nation editor Katrina vanden Heuvel are among the high-profile lefties blogging about his heroic powers.
snip
“He’s probably right that his approach would get more money, but that’s not the most important thing for people like me,” says Rheingold, who has been battling predatory subprime lenders dating back to his days as a Legal Aid attorney in the 1980s. “It’s fixing the damn system. It’s making sure people who can save their homes have the right to save their homes.” Then, with the sigh of someone who's been engaged in the same fight for a very long time, he adds, “I think sometimes we lose sight of what’s possible to achieve.”
http://www.thedailybeast.com/articles/2011/10/05/is-eric-schneiderman-s-ego-sabotaging-bank-reform.html
it hits the target with great precision!
