Banks To Get Away Scott-Free Again? Mass Fraudclosure Settlement To Be Announced Today Without Financial Penalties
As we noted earlier, JPM recorded $650 million in costs to "foreclosure-related matters" read legal costs associated with Robosigning (and if JPM is over half a billion, BofA legal invoices are certainly in 9 digit territory by now). Obviously, this is a situation that has to be resolved as USSA kleptocracy can not be forced to pay for prior (and ongoing) transgressions. Which is why we were not surprised to learn that "Bank regulators plan to announce settlements later on Wednesday with the largest lenders over allegations of shoddy foreclosure practices, but the pacts will not include financial penalties." All those who had been hoping for an equitable judicial treatment for criminal bank actions are urged to bottle their righteous indignation and stow it away (at this rate of inflation indignation will be worth 50% more in a mere 3 months). "The Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision have spent the past few days completing the settlements with some of the largest U.S. banks, including Bank of America Corp, Wells Fargo & Co, JPMorgan Chase and Citigroup Inc. The pacts would resolve only part of a large probe involving a group of 50 state attorneys general and about a dozen federal agencies." But don't worry banks, won't actually have to part with even one dollar: "JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said on an earnings conference call that the regulators would release consent orders that would make the banks address weaknesses in foreclosure affidavits. Fines will probably come later, he said." Probably. Although don't hold your breath.
Federal regulators and state attorneys general have been investigating bank mortgage practices, including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day, that came to light last year.
Some lenders, including Bank of America, temporarily suspended foreclosures late last year while they scrubbed their servicing practices, but government agencies have been pushing for broader reforms.
At first, all the government agencies involved in the probes said they wanted to announce deals with servicers at the same time so there would be a clean conclusion to the process.
That unity began to fracture as the attorneys general, along with some parts of the Obama administration, pushed for servicing changes and fines of about $20 billion, beyond what the bank regulators wanted.
The partial settlement with the bank regulators will probably leave open the question of the banks' legal costs stemming from the weaknesses in their foreclosure practices.
The uncertainty could also mean that some foreclosures will remain stalled, keeping the recovery of the broader housing market in limbo.
On Wednesday, Dimon said a comprehensive foreclosure settlement would be good for everybody, including the housing market.
He also said some of the foreclosure settlements with the government could increase the costs of mortgages to consumers.
Actually no: if fraudclosures clear out the market, if banks released millions in shadow housing inventory, and if there was even a trace of legal precedent in the US, costs of mortgages to consumers would plunge, and a clearing price level without constant Fed supervision would be established, returning such long-missing concepts as unadulterated supply and demand in the housing market. Until then we can expect to hear much more such M.A.D. posturing from the like of King James.