The Farce-Hole Gets Deeper: Obama's "Robo-Settlement For Votes" Cost To Taxpayers: $40 Billion

Tyler Durden's picture

Plunging deeper into the farce-hole, the FT reports tonight that Obama's foreclosure settlement with the banks over their improper seizure of tax-paying US citizens' homes will in fact be subsidized by those very same US taxpayers. It is a hidden clause (that has not been made public yet) that allows the banks to count future loan modifications under the $30bn (taxpayer funded) HAMP initiative towards their $35bn agreement to restructure obligations under the new settlement. As the FT goes on to note, BofA will be able to use future mods made under HAMP towards the $7.6bn in borrower assistance it is committed to provide - which means, in a (as TARP inspector general Neil Barofsky describes) 'scandalous' turn of events the bank will receive payments for averting a borrower default and be reimbursed by the taxpayer for the principal write-down. We have much stronger words for how we are feeling about this but Barofsky sums it up calmly "It turns the notion that this is about justice and accountability on its head". Are the Big Five banks truly beyond the law?

 

FT: US Taxpayers to subsidize $40bn housing settlement

US taxpayers are expected to subsidize the $40bn settlement owed by five leading banks over allegations that they systematically abused borrowers in pursuit of improper home seizures, the Financial Times has learnt.

 

...

 

However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter. The existing $30bn initiative, the Home Affordable Modification Programme (Hamp), provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

 

Neil Barofsky, a Democrat and the former special inspector-general of the troubled asset relief programme, described this clause as “scandalous”.

 

It turns the notion that this is about justice and accountability on its head,” Mr Barofsky said.

 

BofA, for instance, will be able to use future modifications made under Hamp towards the $7.6bn in borrower assistance it is committed to provide under the settlement. Under Hamp, the bank will receive payments for averting borrower default and reimbursement from taxpayers for principal written down.

 

...

 

Andrea Risotto, Treasury department spokeswoman, said this system “leverages a way to help more people”.

 

But people familiar with the matter told the FT that state officials involved in the talks had had misgivings about allowing the banks to use taxpayer-financed loan restructurings as part of the settlement. State negotiators wanted the banks to modify mortgages using Hamp standards, which are seen as borrower-friendly, but did not want the banks to receive settlement credit when modifying Hamp loans. Federal officials pushed for it anyway, these people said.

 

Alys Cohen, an attorney at the National Consumer Law Center, said that if the arrangement increased help, then it was ”good for homeowners in the long term”.

 

"But in the end the servicers are not really being punished. They’re getting off easy,” Ms Cohen said.

 

As if the banks have not been spoon-fed enough over the past three years? We look forward to the mutually assured destruction spin (what would happen if they had to 'spend' that money themselves?) that will be propagandized should this be questioned openly and perhaps a glance at the level of bank reserves sitting on the Fed balance sheet might bring the citizenry off the couch, away from American Idol, and at minimum write a sternly worded text message to their closest BFF on Facebook.

Just to be clear: the guilty party in a fraud against taxpayers has their 'punishment' paid for by the innocent taxpayer who had the crime committed against them? ok, thank you.

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AgShaman's picture

A couple years ago....you paid for Obama to fly around and campaign for his fellow Demo-Rats.

The taxpayers were fine with this arrangement.

You could tell them there was a nuclear disaster in Japan recently and they would not believe you.

Face reality....the city tap water is working quite well

ChrisFromMorningside's picture

No one will be on the hook for anything. It will all be defaulted upon. The astronomical debt numbers and total devaluation of currency are completely out of sync with reality and are fundamentally unsustainable. The financiers and politicians are just looting the last few bits they can before the system goes completely bonkers.

john39's picture

the settlement is also a bailout of state governments.  I know that my own state has major budget gaps.  the state gov will use this money to fill those gaps for another year, should last until right about after the 2012 election.  bankers or politicians, can't decide which group is more theiving and dishonest.

TheFourthStooge-ing's picture

john39 said:

bankers or politicians, can't decide which group is more theiving and dishonest.

I recommend basing your decision on scientific analysis. Gather a large sample of them, burn them at the stake, and make a record of how long it takes for each to combust completely. If there is a statistically significant difference between the two groups, then clearly more research would be called for.

 

fuu's picture

If we dunk a banker underwater and he drowns it means he is not a witch.

francis_sawyer's picture

either that or you could build a bridge out of them...

HiHoAg's picture

I suggest a control study for your scientific analysis.

Gather 100,000 of each and throw them off the top of the Sears tower and record the free fall time of each group.

If the rusults prove inconclusive, maybe 100,000 lawyers could be added to the experiment to add perspective.

Catullus's picture

Then the states are morons for not holding out for more.

Archon7's picture

Makes you wonder whose d*ck's up whose @ss...

disabledvet's picture

I agree with this. In effect "they're simply wards of the State" and as such you and I and the Durden's here need to start "flying over the Cuckoo's Nest" on this one. The more we give it press the more we give reason to the Hyman Minsky'ied Wall Street to think they matter to anyone or anything other than the political classes who they toady up, corrupt but ultimately live off of. "Move along, no capitalism here to see anymore." Just another bunch of clowns ready to be picked off one by one by 4000 years of Persian Imperial history.

A Nanny Moose's picture

"The banks are not going to pay anything. They are insolvent,"

Bingo. Anybody who thought for one minute that fines were going to be paid by a bunch of banks with no money, has not been paying attention.

 

Dr. Engali's picture

Justice is reserved for the little people. You smoke a joint you go to jail. The banks steal trillions they get a bail out.

tarsubil's picture

Justice is not reserved for anyone. Going to jail for smoking a joint ain't justice. It is like everything else in this fiat world, bullshit.

Dr. Engali's picture

You're twisting my words. I think going to jail for smoking pot is a perversion of justice just as bailing out the theives is a perversion of justice. My point was the "crime" that does no harm is the one who gets punished.

pods's picture

Hell Doc I think the rule now is THEY smoke a joint, YOU go to jail.

pods

Dr. Engali's picture

For cripes sakes. Don't give them any ideas pods.

BlackholeDivestment's picture

 

         TODAYRIGHTNOWTODAYRIGHTNOW

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

        http://www.youtube.com/watch?v=N6FXNB1lHBs

                       Doctor Doctor ...please  

         http://www.youtube.com/watch?v=bT29fq0slGc  

                          The Cup of Fornication

                       filled with the wine of wrath

                          defines the consumer

                                       is

                  paying for the ''joint'' in the joint 

         http://www.youtube.com/watch?v=A790-gWdFYA

Unprepared's picture

Sticky Fingaz - Bad Guy

 

organized crime,infratated the force
we above the law,that's cause we paying em off
gave my debt to society,but where's my change
for when i went in,i came out worse or even the same
its the game of life
been like dis since the beginning

http://www.youtube.com/watch?v=qKiiZMvByKs

Woodyg's picture

In the year 2000 - if we vote in a republican Then justice will Finally be served.....

2008 - if we vote in a democrat Justice will Finally be served......

2012 - if we vote in a republican Justoce will Finally be served....

Anyone who votes for Either party should just STFU.

TheFourthStooge-ing's picture

Long torches and pitchforks. We're gonna need a lot of rope, too, a whole fucking lot of rope. Oh, and tar and feathers for their children; after all, we must think of the children.

 

Melin's picture

Look.  We are replete with corruption.  Do not joke about punishing innocent children for their control-freak parents' sins.  It's too dangerous.

TheFourthStooge-ing's picture

Lest any of the Reichland Security monitors viewing this discussion get the wrong impression, let me state uncategorically that, unlike your political bosses, the Kindermörder-In-Chief, or their banker parasite overlords, I cannot and would never condone or advocate harming any innocent children, not even the brown ones that the aforementioned categories of human filth seem to delight in incinerating and exterminating.

What I would advocate is stripping all assets and wealth from the guilty and their heirs, and in order to prevent their pestilence from rising like a malevolent phoenix, forbid their next five generations of descendents from acquiring any wealth above a minimum wage level. Since these fuckers wipe their asses with the Constitution and pervert the entire concept of rule of law, they do not deserve the rights guaranteed by the Constitution nor any protection offered by a properly functioning justice system.

 

Archon7's picture

I suppose technically, treachery is still a crime punishable by swinging the perpetrator from the end of a long rope...  too bad the system seems to have lost the will to enforce it.

AgShaman's picture

Sorry....I appreciate the humor....but my hatred for "Cramerica" was too strong to forego the "southernly redness"

spankthebernank's picture

When will the sheep wake up? There is fleece all over the barn floor!

When corruption is this public the end must be nigh...

Harlequin001's picture

The sheep will not wake up until they are literally starving. History has taught us that...

LowProfile's picture

I think in this country it's when the cable teevee gets shut off and they can't afford beer & weed.

ebworthen's picture

That's the "off the couch look outside" cue.

The "no food" cue always awakes the wolf/bear/lion gene.

The guillotine/hanging gene is activated watching your loved ones suffer.

TheFourthStooge-ing's picture

When is the "torch their homes in the Hamptons and shoot the bastards as they try to get out" gene activated? Just wonderin'.

 

Harlequin001's picture

About 5.30 on Wednesday I guess...

sun tzu's picture

You're an Obama hater and a racist. This is a great settlement that will do much to help the taxpayers and punishes the bankers for their bad acts. Barack would never do anything to hurt the middle class. Obama is a good man with happy thoughts all of the time. 

Harlequin001's picture

and he has a nice pet hamster to boot...

Can't be all bad eh...

UP Forester's picture

Didn't Richard Gere also have a pet hamster?

owensdrillin's picture

Yeah but Richard's wasn't a nice hamster, it was a shitty one.

Cult_of_Reason's picture

ya’ll iz Obama hata an’ racist gunsta. this iz great setlamant it will do much ta help da taxpayas an’ punish da bankstas fo’ da hustla bad akts. Barack wuld neva do anythin ta hurt da midl clas. Obama iz good nigga with hapi thouts all o’ da time.

Dr. Engali's picture

Sun tzu leave the trolling to Hamy , Robo, and MBD. It's not your strong suit.

Problem Is's picture

Easy on the Green Shoots Lime Kool-Aid, there sun tzu...

disabledvet's picture

well...he tries hard. He's taking in a Lakers game while he does it!

ultimate warrior's picture

Ben Swann broke a story about voter fraud in Maine. It looks like RON PAUL will be the winner when it is all said and done! No one else is talking about it. We can stop fascism if we man up and do our part for liberty. Don't give up hope just yet.

http://www.fox19.com/story/16956297/reality-check-maine-gop-releasing-corrected-caucus-numbers-why-there-may-be-a-new-winner-saturday

 

Problem Is's picture

Diebold does the voting now...

disabledvet's picture

The other news is that both Dr. Paul, Governor Romney and New Gingrich have told CNN to "stick it where the sun don't shine" vis a vis the so called debates. As far as CNN is concerned "it's all a one man race now: Rick Santoroum against you and me."

Sockeye's picture

"God forbid we should ever be twenty years without such a rebellion.
The people cannot be all, and always, well informed. The part which is
wrong will be discontented, in proportion to the importance of the facts
they misconceive. If they remain quiet under such misconceptions,
it is lethargy, the forerunner of death to the public liberty. ...
And what country can preserve its liberties, if its rulers are not
warned from time to time, that this people preserve the spirit of
resistance? Let them take arms. The remedy is to set them right as
to the facts, pardon and pacify them. What signify a few lives lost
in a century or two? The tree of liberty must be refreshed from
time to time, with the blood of patriots and tyrants.
It is its natural manure."
Thomas Jefferson

BlackholeDivestment's picture

...Jeff, that antichrist turd.

Didn't he die on the Second of Sirius? LMAO.

That day must line up with something screwball, like the birth of a slave masters child ...err something. 

Yeah, Jeff was such a humble guy he did not kill himself after writing that.

                                                                           ....what a hypocrite. LMAO