Banks Getting Nervous as Legal Prospects Dim


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Just How Relevant is the Multi-State Settlement?

Editor’s Comment: There are jokes going around about how you can’t fix stupid. We should add that you can’t fix title either unless you throw out hundreds of years of law and  market expectations. No settlement will clear title, nor will it absolve the Banks of criminal responsibility — but the latter can be settled by AG’s too willing to grab for the public relations coup and not willing to stand up for the citizens of their state.

Yves Smith has captured the flavor of the moment in the article below. The Banks seeking a settlement had better be careful what they wish for. As events unfold outside the boundaries of the settlement, they may have put themselves in the position of already admitting to the fraud, without any meaningful protection against liability —- civil or criminal — for screwing up the title registries around the country.

In the end they will either be required to pay far more than this settlement to get signatures that clear up chains of title or they will be forced to fold their tents. The ultimate responsibility for fixing the title problem will come back to the banks who created them because nobody else will do it. Their assumption that they could finesse their way out of this was and remains, well, stupid.

After all this time, it is hard to imagine that we are only half way through this game. It is the second half that will determine the fate of the banks and our nation.


The Administration, through the nominal head of the bank settlement negotiations, Iowa attorney general Tom Miller, has moved its final deadline for a deal yet again, this time to Thursday.

One event of the day was a non-event. New York AG Eric Schneiderman has scheduled a conference call to the media on the settlement for 6 PM, then postponed it indefinitely 10 minutes before the scheduled time. One can presume that whatever he had intended to say was rendered moot by events…but what events? The only thing one can infer is that he is presumably still negotiating. Per Reuters (hat tip Lambert):

Last Friday New York filed a lawsuit that conflicted with part of the settlement. His office has been in discussions with bank lawyers to move forward with both the lawsuit and the settlement, according to two other sources familiar with the matter.

According to another person familiar with Schneiderman’s thinking, the tenuous nature of the talks caused the postponement. Schneiderman still is a holdout, that person said.

So, reading between the lines, it looks as if Schneiderman saw his MERS lawsuit as not inconsistent with the settlement (remember, Delaware and Massachusetts both have filed MERS suits, and the Massachusetts suit targets the five biggest servicers along with MERS) and the banks begged to differ. This is consistent with the report by Loren Berlin in Huffington Post:

Bank executives argue that New York attorney general Eric Schneiderman is using the lawsuit to go after claims already covered under the settlement, said the source.

But perhaps the biggest news was that Florida is now among the states not yet signed up. This is pretty surprising, given that Republican AG Pam Bondi had the nerve to hector California’s Kamala Harris last week for not joining the settlement. Although some reports indicated that Florida had gotten a sweetened deal, the HuffPo story says she wants a side deal, which is what California would get.

So far, the states that are listed as not yet agreeing to the settlement are California, Florida, New York, Nevada, Delaware, Arizona, and Massachusetts. The bad thing about this list, from the officialdom’s perspective, is that it includes the states that were the epicenters of the housing bust.

But while the claim is that these states will eventually fall into line, it is the banks that now appear to be the serious holdouts, as news reports we highlighted yesterday indicated. From Huffington Post:

Bank concerns reached fever pitch on Friday when the New York State attorney general’s office sued Bank of America, JP Morgan Chase and Wells Fargo, accusing the banks of deceptive and fraudulent use of a private database used to register mortgages.

“I think it’s fair to say that the banks are becoming an obstacle to completing this settlement now,” said the source, who spoke on condition of anonymity.

The banks clearly don’t want to be exposed to MERS litigation. While Schneiderman and Massachusetts’ Coakley face some hurdles in pinning liability on the banks (they have MERS, foreclosure mills, and vendors like LPS as scapegoats liability shields), the bad press and the exposure of document defects would embolden and aid stressed homeowners and thus be damaging to them.

The other interesting tidbit of the day was the report by Shahien Nasiripour of the Financial Times that the Administration is pushing hard to get this deal closed. That could be inferred by the way HUD chief Shaun Donovan has taken a high profile role, including talking to “progressive” media (yours truly is apparently in a special category, “incorrigible”).

But the FT piece reveals that some core constituencies aren’t buying what the Administration is selling:

Aides to President Barack Obama have in recent weeks courted civil rights groups and borrower advocacy organisations, scheduling meetings and calls in an attempt to gain support for the expected settlement and muffle criticism from key political allies…

The meetings have occasionally served as a “gripe session”, as one participant called them, because many of Mr Obama’s most ardent supporters have criticised the pending deal’s terms for the degree of relief provided and the extent of the release from legal claims it provides for banks desperate to minimise mortgage-related liability…

Janis Bowdler, a housing expert at the National Council of La Raza, the largest US Hispanic civil rights group, said the settlement would be a good start for the White House as it seeks to prove it is doing all it can for homeowners.

“Wrapping up the settlement now is the right thing to do, but it’s only going to be a win for them politically if they follow up with the financial crimes task force,” Ms Bowdler said…“Otherwise, if this is it, and they’re satisfied with just $25bn, I don’t think that will be enough to convince voters that they were doing all they could to fix the housing market.”

30 Responses

  1. Enraged,
    I hope investors (public pensions) lose everything. That’s what they get for usuriously betting against their fellow Americans.

    And I say we WAGE WAR ON ISRAEL, they’re obviously the real enemy of all humanity and the primary beneficiaries of Wall Street and the Federal Reserve.

  2. It’s just the same old story. My husband nor anyone in the city government has had a raise in 4 years. In addition they took away all shift differentials and have up the amount of the employees portion of insurance 4 times. Effectively decreasing pay for 4 straight years. Ok, you understand other people have no jobs at all and the town is hurting financially. But then you find out that other town employees that were uionized, police, fire, rescue have all gotten raises for the past 4 years. Then the town decides to do a little remodeling. New boardwalk – only the best 8 million dollars, new convention center 15 million dollars, increased benefits for the town counsil, they are worth it and the list goes on. So the town workers start getting a bit antsey…start questioning….hmm

    They have a town counsil meeting wherein these repugnant people sit up and tell the town workers, “you all were overpaid for the last 30 years” count your blessings you still have a job.

    Do you see what is happening here folks..we are being kicked..while everyone else gets rich off our backs. People are just a commodity. Work them to death, take as much as you can take from them and kick ’em’ to the curb. Horrifying.

  3. Enraged,

    This is the position we were in after WWI and the Great Depression. No money..but then the US had enouigh to build a Big Dam , Oak Ridge Labs, Los Alamos Labs , planes , ships and tanks to fight WWII…

    The World agenda continues.

  4. 25 billions to sell America to the banks, and most of it is investors’ money anyway… Won’t cost a penny to the banks.

    Then again, we need to find a war to wage and banks are great at financing wars. That’s what they do. Everybody knows the best way to resolve an economic crisis is to wage war. Makes manufacturing work. Gets rid of overpopulation. Radical but… surefire! So, next step: privatize social security. America needs money, you see! So, tough talks against Iran (probably the next little battle, to start testing the new-and-improved American war machine.) Next, China. Obama is hell bent against China. Too many people there breating our air and drinking our water. We need to get rid of them.

    Oh, and in case you haven’t read: The US account for 50% of all weapons sold in the world in 2011! Yepeeeehhh! Yep, preparing for what is called “A good war”. I think we’ll go by increments. Iran, maybe North Korea, I’m sure we can find a few other little countries to go after before we go for the big game… China.

    And you thought we had problems?

  5. Does the multi state settlement have to be approve by a federal judge? However this settlement does not affect individual lawsuits by homeowners rights.?

  6. There should be a OPT OUT from the Mortgage Settlement for each
    homeowner ,if he does not cash the big Check .

  7. No surprise here. That’s why you won’t find a single cheerleader post by me anywhere. The “fix” has been in for a long long time. Our government, the big banks and wall street have been running this scheme for years and knew that not only would they steal the wealth right our from under us; they would then call us deadbeats and we are still paying taxes to fund their scheme that, have not doubt, will continue. So, whomever it is that they determine are “responsible” citizens, like they themselves, will benefit and be helped. Whichever “deadbeats” they determine will get some relief”, just won’t know what to do with the life altering government check in the amout of, what, maybe, $1,800 bucks and “goodbye give us your house and have a nice “deadbeat” life. Ain’t life grand! The even more dangeous aspect of this fiasco, is the fact that they have made it clear they can break the laws, commit crimes and then the laws are changed so they may more easily and with less hastle profit from now “legal” schemes against the public. My instincts tell me that these won’t be the only laws that will be redefined in their favor or in any favor the government so desires at its will. What I am so surprised by is the fact the the ACLU has remained fairly quiet while our rights are being striped away one by one. It is no longer the United States of America but the United States of the Banking Cartel.

  8. Misprision of a Felony:Failing to Report a Felony

  9. To usedkarguy /boots

    Yes , I may have lost this battle but still have fight on . My case was in Federal Court CA . Appeal is an option but won’t stop sale in most cases. Judges seem to have marching orders , amazing that they got to almost all of them . No way they cannot see the fraud upon our courts. Sad day for Americans.

    Good luck to all of us , as this country is quickly going down the dark side .

    usedkarguy send me an direct email …let’s talk.

  10. to allan baron,

    you could file an appeal. are you in Ca? was your case in federal or state court? it is not the end if you just pursue this avenue. i know its too expensive and some lawyers could charge as high as 10K. I did it pro se. get a final judgement from your lawyer and you could file an appeal. goodluck.

  11. sorry to hear that, Alan. You’ve really fought hard. I thought you had won your case. We go way back. I’m on the bubble, too. But I’m not done yet. Got a couple aces up my sleeve (I think).

  12. The media appears to be getting a little nervous, too. Check out the brain damage this Forbes reporter took over the last two days. Not that I think he cares; it’s just nice to see the population fighting back against the propaganda that the likes of Forbes and Fox keep spewing. Keep you eye out for crappy articles like this. With enough negative comments, they eventually scrub ’em.

  13. @Carie,

    Right! She has not started to sing yet but… watch out when she does: she won’t shut up anymore!

  14. The fat lady has NOT sung yet…

  15. What about the ones not included in the settlement—like IndyMac/OneWest?
    And how does this effect Schneiderman’s lawsuit with MERS?
    And how does this effect the fraudulent recorded documents?

  16. The long battle is over folks , the fix is in . Does not matter what proof your have , the bank has paid everyone off in our government .

    AG’s all caved they are cowards and sold all of America out not just those in trouble about to lose their home.

    I just today heard from my lawyer , I lost my long running 5 year battle today vs BOA . Even worse it was dismissed w prejudice.

    Not sure about anywhere else but Federal Judges are throwing cases out in CA en masse.

  17. @E. Toile,

    What I want to see now is all those armani suits dropping nervous poops at the idea of having to… maybe… give back some of those obscene bonuses for such a good job! And lose their job, too. Now, that’s a good prospect!

  18. My favorite press is when they say….the banks are demanding….


    The only defense they have is piling the dynamite around them and threatening to blow up the whole system. Hey, it did wonders for them a few years ago when Hank P. soiled his britches over the threat of tanks in the streets.

    This time, we should aim those tanks straight at Paulson and his buds at GS. Go Boom MOFOs.

  19. Touche Brian

  20. TMT —

    Good article on Regulators vs 11 WS banks.

    Nothing paid off during the big hole period. Insurance fraud — criminal.

    No statute of limitations for criminal — but, there is for civil. Unless, discovery rule applies. Are AGs blocking (civil) discovery by the settlement? Banks “bank” on individuals getting no real discovery in courts.

    Can any future criminal investigation negate the AG civil damages settlement? No. That will still be up to individuals. On YOUR own.

  21. Enraged — good for Oklahoma!!

    TMT — hope Biden stands firm.

    Future criminal investigations will not help civil damage that the agreeing AGs want to give away.

    There is a big hole of no investigation for the period of at least 2004 to early 2008. Victims of this hole are not being addressed by the settlement. That is what the banks want – no investigation. But, this period is the crux of the fraud that led to the financial crisis. This is the major flaw of the settlement. The real victims — remain victims. Many other victims after the crisis, those subject to declining home values due to the financial fraud of this period. They will get some “relief”, according to this settlement – if they are still paying. But, the real, targeted victims of 2004 to early 2008 — remain victims, with no investigation before AG settlement.

    2000K bucks to shut down civil damages?? The big hole remains —

  22. Biden not yet ready to join foreclosure settlement
    5:34 PM, Feb. 8, 2012 ||newswell|text|FRONTPAGE|s

  23. Zoe posted this under the “Obama” article. I haven’t read the Reuters tidbit she is refering to but, if Oklahoma does, indeed, break away, it’s going to be more and more difficult for Schneiderman to betray us shamelessly as he seems to be intent on doing.

    Any news about Beau Biden’s decision? Last I saw, on the Ratigan’s show, he was still pondering his decision…

    Zoe, on February 8, 2012 at 3:18 pm said:
    Reuters reported this morning that Oklahoma officially declined the settlement as well.

    Oklahoma is on a roll. This rejection of bank immunity combines with three Oklahoma Supreme Court decisions that effectively shot out the servicers’ fake knees for standing. An Oklahoma pro se litigant, in Dec. 2010, had the first appeal breakthrough on the issue of lack of standing after the foreclosure “clerical errors” became widely known. Then last month, two more cases followed the path this pro se litigant cut.

    Hmmm, now that puts a kink in their chain

  24. This, on the other hand, tells me banks aren’t overjoyed…

    Serves them well!

    Come on guys! Get your money out! Out, out out!

    Bank Fee Backlash Cost Big Financial Institutions More Than 2 Million Customers
    By Bruce Watson
    Posted 1:20PM 02/07/12 Bank of America, Citigroup, Banking, Consumer Ally

    Comments Print Text Size A A A 313617501Nobody likes to leave their bank. Apart from the hassle of setting up a new account, switching your direct deposit, re-entering all of your automatic bill payment information, and getting used to a new network of ATMs, there’s the fact that banks are supposed to be our partners.

    That’s how they advertise themselves, after all — as the steady friends who hold our money, gently push us towards our dreams, and even pay us a little bit of interest for hanging around. Looked at from this perspective, leaving a bank isn’t a spur-of-the-moment decision like switching from Pepsi to Coke or McDonald’s to Wendy’s: It’s more like breaking up with your friendly-but-slightly-abusive girlfriend.

    The emotional roller coaster aside, thousands of people switch banks every day, for a host of reasons: better interest rates, easier access to their money, or because they’re leaving one town and moving to another. Last fall, however, an estimated 610,000 people dumped their significant bankers for a very specific reason — to protest steep bank fees.

    According to a recent study by Javelin Strategy and Research, 11% of the 5.6 million people who switched banks over the last three months did so as part of “Bank Transfer Day,” an event inspired by Bank of America’s (BAC) decision to begin charging its customers $5 per month to use their debit cards for purchases. BofA ended up scrapping the plan, but it, and many other banks, added a variety of other fees. In fact, as a 2011 Pew study showed, the average bank account has 49 fees, many of which — like the confusing “‘Staff Assisted Requests for Any Item or Statement Copy’ fee, the ‘Foreign Check Clearing Services for up to US $5,000 Drawn from Canadian Banks’ fee, the ‘Online External Transfer to Your Accounts at Other Financial Institutions’ fee and the ‘Large Amount of Coins Deposited’ fee” — charge for services that used to be free.

    (Full disclosure: The author recently discovered a new $25 monthly fee that his bank is now charging him because his balance is below $15,000. This fee was added late in 2011, and was not part of the original banking agreement. The author is currently trying to get his money back, is exploring other banking options, and is attempting to remain unbiased in his discussion of the greedy, soul-sucking clever, fee-adding folk who run many of America’s largest financial institutions.)

    On the one hand, Bank Transfer Day was hardly the overwhelming consumer uprising that big banks might have feared and activists had hoped for. More than 218 million Americans have some form of bank account, so in the grand scheme of things, the transfer tidal wave of 610,000 was more like a trickle. Even so, many banks — including Citigroup (C) and Bank of America — managed to give themselves PR black eyes as they called in security guards and police officers to keep protesters from withdrawing their money. Predictably, videos of these skirmishes found their way online, vignettes that are eerily reminiscent of the bank run scene from Mary Poppins.

    But while the number of customers who were able to move their money on Bank Transfer Day itself was relatively small, many others have joined them over the following months. As Javelin reports, a further 26% of people who switched banks during the last 90 days — about 1,456,000 customers — also cited new bank fees as the reason for their moves.

    This pattern of a slow diaspora from big banks dovetails with the demographic data that Javelin collected. Judging by the videos of Bank Transfer Day skirmishes, one might assume that the bank exodus of 2011 was largely composed of wild-eyed radicals — or, as one Javelin researcher reported, “young, low-income hipsters.” Not so: According to Javelin, people who switched banks “trended toward higher incomes.” As these higher-wealth, generally older consumers continue to consider their banking options, it seems likely that America’s largest banks are going to continue hemorrhaging customers.

    See full article from DailyFinance:

  25. Meanwhile Golman Sachs got booed at last weekends Human Rights Campaign (HRC) Annual gala in Manhattan, the day after Judge Baer read them the riot act:

    Awesome. America is waking up even though HRC gave them an award, crazy.

  26. Reading this article (that I posted under the previous one), I don’t get the feeling that banks are “nervous”… What am i missing? All I see is that the circus continues.

  27. How many people will be bribed to say nice things about legalizing organized crime known to everyone from the president on down? So far it is most of the AG’s in the nation that agreed to be bought off by a banking mafia. These same AG’s that have certainly received hundreds or thousands of pieces of evidence that prove fraud, forgery, perjury, larceny, wire fraud, notary fraud and RICO acts as a business model and practice.
    That we are still having this conversation about a settlement shows crime runs our nation.

  28. The War started…. Regulators vs. 11 WS banks….

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