Today’s Washington Post sits open on my desk with the headline: “Settlement launches foreclosure reckoning—U.S., states pledge relief for homeowners under deal with five big banks.” Next to it, my Bible is open to Isaiah 55. Could two descriptions of “relief” be more opposite?
In the first, Wells Fargo, Bank of America, JPMorgan Chase, Ally Financial, and Citigroup steal the homes and life savings of hundreds of thousands of people. (If you or I “robo-signed” documents, we’d be charged with forgery. It’s illegal.) But with no cop big enough to wrassle the Big Five into a noisy, urine-stained jail cell, and no judge with a gavel hard enough to thwack down a decent judgment, applying pressure for some restitution fell to grassroots groups, the states’ attorneys generals, and partisan powerbrokers—a tenuous coalition at best.
After 16 months of posturing, the “principalities and powers” behind the Big Banks agreed to let some artisan bread crumbs fall from their private-dining, Madison Avenue tables. Now, the 750,000 people whose houses were stolen at pen-point can sign up to get approximately $2,000 each in restitution. As blogger David Dayen put it, it’s the equivalent of the banks telling their victims, “Sorry we stole your home. Here’s two month’s rent.”
The banking settlement “forces” the lenders to give some money back. Forty-nine states will get a much-needed trickle of cash and cash-like substances. And they’ve agreed to reduce the principal on mortgages with “negative equity” to the tune of $17 billion over three years. However, that amounts to about 2.4 percent of the $700 billion needed to bring borrowers’ noses to the surface, according to Capital Economics’ Paul Diggle. The fine doesn’t nearly match the crime. And the banks have been tucking this money away in slush funds in preparation for the settlement. They are paying out of their excess—not until it hurts.