Bank Settlement and Fairness

2008 was a notable year, most notable in the fact that many large banks came close to failing because of their improper investments in mortgage securities thus sparking the worst economic recession since the Great Depression.  Since that year, many of those banks, in an effort to rid themselves of mortgages, committed many fraudulent acts while attempting to foreclose on thousands of homeowners.  Perhaps the gravest of these fraudulent acts was the mass signing, often times improperly and with surrogate signers, of foreclosure documents that were then sent to homeowners.  These mass signings were many times not even done by bank officials but by random people hired to sign a bank officials name on foreclosure documents hundreds upon hundreds of times.  It got to the point where there were multiple people hired to sign one person's name.  If this isn't a punishable act, I don't know what is.  What makes this such a grave, fraudulent act, besides the signers not being the actual person whose name they were signing, is the fact that many of the documents they were signing were not accurate and to top it off, some of the documents putting people into foreclosure were for people who had been making their payments on time and were in no danger of losing their home.  It is this folly of multiple large banks that drew a settlement with the federal government over the past weeks to try and rectify this issue.  So lets look at what was settled upon and see if it is actually fair. 

The number on the settlement is $26 billion give or take.  A good chunk of that is going to help people reduce their interest rates through re-financing their homes.  Some will go to reducing the balance on mortgages still owed.  The kicker, though, is the $1.5 billion that will be divided up among homeowners who were improperly removed from their homes.  You might be thinking, "$1.5 billion is quite a bit of money, what is wrong with that?".  Well, here is whats wrong; if you break it down amongst the people who were improperly removed from their homes, it comes out to about $1,500 per homeowner.   Perhaps I am an idiot, but I need someone to explain to me how that is fair when the five large banks for who this applies paid out over $114 billion in bonuses last year.  How is $1,500 going to help a family who was removed from their home.  In many cases, that amount is simply one mortgage payment and not nearly enough to put towards a down payment on a new home.  Hell, for a lot of families, $1500 won't even last a month.  Yet this is what our federal government and the big banks agreed on.  The only good that will come out of this is that this settlement is not final and does not close the doors on future legal procedures that may be levied against these banks due to their actions over the past years.  In fact there was just an article that came out today that revealed talked about a California audit of foreclosure proceedings and how a good number of them are simply put, illegal. (Article linke here) Some of the acts committed by the big banks are punishable with imprisonment and I personally feel that now is the time to take these big banks to court and make them face the consequences of their actions. 

I have talked before about these big banks and how their actions are horrific.  I will not support these banks and avoid them whenever possible.  I truly hope that more states investigate these banks, perform audits of their actions, and hold them responsible for what they did.  4 million homeowners were removed from their homes over the past 4 years, 14 million homeowners (or 1 in 5) are currently under water with $700 billion in negative equity (my wife and I are one of those), and the situation is nowhere near from being resolved.  If fairness is to be dealt out, then perhaps we should start by taking back the $114 billion in bonuses that were paid out just last year.  Then, at least, we would have a better starting point at which to tackle this enormous problem we are facing.  But for now we have to deal with this small start, this $26 billion that is supposed to help the problem.  It is a start, don't get me wrong, but it will only dent the surface and bring the problem no where near to resolution.  We shall see what happens in the future, but I sincerely hope that the large banks involved in this crisis are brought to heal, held accountable, and prosecuted to the full extent of the law.  There is no excuse for their actions except greed, and we all now how the majority of America feels about corporate greed.  We shouldn't stand for their blatant abuse of power and we need to take more steps towards getting the federal and state governments to take action against them.