There is No Justice When It Comes to the Banks

There is no Justice. Countrywide financial settled a civil action by the Department of Justice for $335 million. This equates to $1,675 dollars in compensation for each of the 200,000 listed victims. Meanwhile Hispanics and Blacks were pushed into sub-prime loans which drove the housing bubble, prices, through the roof. Many lost their homes in foreclosure due to bubble payments and high interest rates, when a regular mortgage payment might have been financially feasible.



Below are some of the details from the Department of Justice press release. While they pat themselves on the back for the largest settlement in history there have been no criminal prosecutions for the financial crisis and millions have lost their homes.

In today’s settlement with Countrywide Financial Corporation, we resolved the government’s allegations that Countrywide and its subsidiaries – which are now owned by Bank of America – engaged in discriminatory mortgage lending practices against more than 200,000 qualified African-American and Hispanic borrowers from 2004 through 2008. The settlement provides $335 million in compensation to victims of Countrywide’s discrimination during a period when Countrywide served as one of the nation’s largest single-family mortgage lenders and originated more than 4 million residential mortgage loans.

In this thorough investigation, the Department uncovered a pattern or practice of discrimination involving victims in more than 180 geographic markets across 41 states and the District of Columbia. These discriminatory acts allegedly included widespread violations of the Fair Housing Act and the Equal Credit Opportunity Act, and resulted in African-American and Hispanic borrowers being charged higher rates for mortgage loans – solely because of their race or national origin.

These allegations represent alarming conduct – by one of the largest mortgage lenders in this country, during the height of the housing market boom. For example, in 2007, a qualified African American customer in Los Angeles borrowing $200,000 paid an average of roughly $1200 more in fees than a similarly qualified white borrower.

This settlement will compensate the more than 200,000 African-American and Hispanic borrowers who were victims of discriminatory conduct, including more than 10,000 African-American or Hispanic borrowers who – despite the fact that they qualified for prime loans – were steered into subprime loans.

The settlement gets worse. It's not the Justice Department or the government who will oversee administering the $335 million victim compensation fund, it's a settlement administrator, but chosen by Bank of America, who bought Countrywide in 2008. The biggest problem is the mortgages, profits and executive bonuses. That money is kept for the most part. Also, a settlement implies no one has to publicly admit wrongdoing. Additionally, Countrywide does not exist anymore so it's unclear of Bank of America has to stop discriminatory practices. There also is no mention of giving subprime mortgages to people not in the country legally, which is still a policy of BoA, clearly a major financial problem in the first place. Bottom line, $335 million is just another slap on the wrist, pay to play fine, in comparison to the profits banks and their executives made while regular people went broke and were foreclosed on.



Eric Holder's gift to the nation

At this joyous Christmas season, the government can tell blacks and Hispanics that discrimination against them in the housing market will not be tolerated, at least not after the fact. Meanwhile, the Obama reelection campaign can tell Wall Street donors not to worry - no one is going to jail, the bonuses for the 1% will not be clawed back, and the shareholders are not going to suffer any noticeable losses from illegal behavior. Which means the illegal behavior can continue again and again, and at worst the industry will have to pay small parking fines if caught.

Eric Holder

The GOP is using Eric Holder as poster child for what's wrong with this administration since Obama won't fire him for Fast and Furious. Some sort of bizarre "program" to let guns go border hopping and into the hands of the Mexican drug cartels, which in turn were traced to killing a border agent and a host of other violence. Holder claims to not know anything about this. After watching the Department of Justice basically do nothing, beyond our token "let's lock down the Hispanic and Black vote for election 2012" move here on going after anyone, even the token bad boy poster child for it all Countrywide, I have to agree with the GOP rants on this score.

Of course you won't hear from the Republican talking heads anything about the lack of real consequences, criminal prosecutions surrounding the financial crisis either, as a reason to claim this Dept. of Justice is giving Wall Street a free pass.

Blacks have had all of their economic gains since 1965 equal rights legislation wiped out this recession.

Homo economicus vs. Identity Politics

It would be great if we could count on Homo economicus to decide elections.

More wonderful yet, considering the fundamentals of democracy within a republic, would be a rational Homo reciprocans determining elections.

(Links to that ever-great demonstration of the feasibilty of such ideals -- Wikipedia!)

The colors of a rainbow ... . so pretty .. in the sky

Are also on the faces .... of people .. going by

I see friends shaking hands .... sayin' .. how do you do

They're really sayin' .... i love you

I hear babies cry .... I watch them grow

They'll learn much more .... than I'll ever know

And I think to myself .... what a wonderful world

-- excerpted from 'What A Wonderful World' by George David Weiss, George Douglas, Bob Thiele (sung and popularized by Louis Armstrong), via web page

NY Atty Gen + FHFA

This post at Naked Capitalism implied the New York Attorney General is doing end runs around the Dept. of Justice to prosecute financial crimes surrounding the financial crisis.

he inspector general for the FHFA, the supervisor of Fannie and Freddie, and the Federal Home Loan bank, has decided to share information with New York State attorney general Eric Schneiderman, is far more significant than it appears on the surface.

It’s a well deserved slap in the face of the Department of Justice.

I’m not certain of the precise scope of powers of the FHFA inspector general. But typically, federal inspector generals have limited scope of action. They can only subpoena documents and cannot subpoena witnesses. And, of course, they are not prosecutors and cannot launch cases. The theory of IGs is that if they uncover something unsavory, they’ll hand it off to the Department of Justice. But as a former IG has pointed out, the DoJ does not take case leads from the IGs unless they are fully fleshed out, and that is well nigh impossible to do in the absence of speaking to witnesses.

Bottom line, we are by far not the only financial/economics site noticing the DOJ is AWOL on prosecutions surrounding the Banks and the subprime/derivatives/mortgage mess.