With details soon to become public about a settlement between state attorneys general and big banks implicated in the huge, national “robo-signing” scandal, President Obama should make clear the deal can’t amount to less than $300 billion from the banks, a prominent homeowner- and corporate-accountability advocate says.
All 50 state attorneys general have been seeking a settlement with the nation’s five largest banks to address their foreclosure practices, such as the filing of thousands of false sworn statements with state courts. Some critics believe that the states have been speeding to an agreement without thoroughly investigating the banks’ abuses and letting them too easily off the hook.
Robo-signing refers to a practice among banks in which employees, contractors and others not only processed large volumes of paperwork, but also completing affidavits without fully verifying the information they were claiming to have knowledge of. This involved the mass production of false and forged execution of documents used to foreclose on troubled U.S. homeowners.
An advocate credited for working to narrow the scope of the settlement deal and not releasing the banks from broader mortgage fraud claims and criminal prosecution; and for the ongoing push to press the Obama administration for a thorough investigation of all aspects of the big banks’ mortgage fraud and make the banks provide $300 billion in principal reduction for underwater homeowners and restitution to foreclosed-on families calls the expected $25 billion settlement of robo-signing scandal “a paltry down-payment on justice for homeowners.”
The settlement process has been contentious even among the attorneys general, as New York’s Eric Schneiderman was removed last summer from the group’s executive committee because he wanted a stronger investigation into the banks’ practices.
“If President Obama wants to run as a champion of the middle class, he can accept no less than $300 billion from the banks after a full investigation of their fraud at every step of the mortgage crisis,” says George Goehl, executive director of National People’s Action, and a founding member of The New Bottom Line coalition.
“Anything less than $300 billion is a win for the one percent that lets the banks off too easily and falls short of helping both middle-class families and communities targeted most by big bank fraud,” adds Goehl, who recently appeared on MSNBC commentator Dylan Ratigan’s TV program.
Goehl contends that $750 billion represents the true scope of the problem of negative equity held by U.S. homeowners. Some $336 billion would cover owner occupied, underwater mortgages serviced by the five big banks at the settlement table, he adds. This $336 billion would also require the holders of the majority of home mortgages in the country, namely Fannie Mae and Freddie Mac, to finally come to the table for American homeowners and the broader economy, he adds.