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Bank Settlement: $25 Billion Down, $675 Billion To Go

By Van Jones
February 10, 2012 - 2:53pm ET
http://www.ourfuture.org/blog-entry/2012020610/bank-settlement-25-billion-down-675-billion-go

This week a $25 billion settlement was announced in
which big banks pay up for a portion of their bad deeds
in the home foreclosure crisis. Everyone is trying to
determine whether this is a good deal or a bad deal.

Here is how I score it. This deal represents small
progress on a small problem. Now it's time to make big
progress on the big problem.

Don't count on finding many good points in the deal
itself, because there aren't a lot. In fact, the main
win can be found in what's NOT in the deal.

A truly horrible deal would have let the banks write a
small check and then seal the door on all further
investigations and pursuits of accountability. This deal
does NOT do that. Because this settlement limits legal
immunity for banks, this deal does not automatically let
the banks off the hook for all of their wrong-doing.
Except for a few issues like robo-signing, state
attorneys general can still fight for more compensation
and relief for the banks' victims. Government officials
can proceed with investigating and prosecuting banks for
their role in crashing the economy and the housing
market. In other words, the door is still open to solve
the much bigger problems we face. Our fight for justice
can, and will, continue.

That is small comfort, perhaps, but it was hard won. So
we should honor the hard work of New York State Attorney
General Eric Schneiderman, California Attorney General
Kamala Harris and others, including many grassroots
progressive organizations like New Bottom Line. They
fought courageously to prevent a total sweetheart deal
for the banks. This outcome is the result of determined
activism, and without this heroic effort, the deal would
have been drastically worse.

That said, there is a reason why many progressives and
housing advocates are furious, and why many struggling
homeowners are left wondering, "How does this help me?"

Millions of homeowners and families are still suffering
under the tremendous weight of a debt blanket that is
smothering the economy.

This $25 billion settlement helps only a fraction of
those homeowners and addresses only a very limited set
of fraudulent behaviors. A number of homeowners will get
some cash payments, but the amounts are negligible
compared to the pain and injustice they have
experienced. The actual total cash paid out by the banks
is only $5 billion dollars, to be split among the
nation's largest banks -- hardly a stiff penalty
considering that the six largest banks in the U.S. paid
$144 billion in bonuses last year. And enforcement
mechanisms remain murky.

We must not forget the more than 14 million homeowners
(one in five) whose homes are underwater, beneath a
crushing total $700 billion in negative equity. We must
not forget the more than 4 million families who have
lost their homes. We must not forget the millions of
families who are in some form of foreclosure proceedings
on this very day.

These are the Americans who have suffered and continue
to suffer. They are worried today, like yesterday,
whether they will still have a home to live in tomorrow.
They are the ones who must choose every month whether to
pay bills or to feed their children.

Here are three things that must happen next:

1) The U.S. Department of Justice and state attorneys
general must investigate and prosecute banks more
aggressively than ever, at a much larger scale than
anything that has happened to date.

2) We must force banks to make massive principal
reduction of hundreds of billions of dollars, to
immediately relieve the 14 million homeowners in the
country who have underwater mortgages.

3) We must change laws and regulations to prevent this
kind of crisis and fraud from ever happening again.

Two weeks ago, I called for hundreds of billions in
principal reduction for homeowners. This would free up
Americans to start new businesses, spend money on
worthwhile products and services, and invest in their
children's futures. We still need to address the $700
billion in negative equity, which in turn is only part
of the nearly seven trillion dollars in total lost
equity created by the banks' irresponsible, and in some
cases, illegal practices.

We need a solution at the scale of the problem, so that
families can get back on their feet, the economy can get
working, and people can reach for their American dreams
again instead of watching them drown.

That is why I say: $25 billion down, $675 billion to go.

___________________________________________

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