A Foreclosure Deal That Falls Short

It seems that nobody can pin down the big banks – once again,it looks like they are going to skirt serious punishment and accountability for the foreclosure mess that they helped create.

Last month we wrote a piece asking if banks, and their quest for profits, were putting agents out of business. We asked who would step up and fight off the big banks and stick up for the little guy. Well, it looks like it might not happen with this result.

And today, the New York Times is asking the same questions. In response to the pending deal, NY Times reporter Gretchen Morgenson addressed the settlement:

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

This may not qualify as a shock. Accountability has been mostly A.W.O.L. in the aftermath of the 2008 financial crisis. A handful of state attorneys general became so troubled by the direction this deal was taking that they dropped out of the talks. Officials from Delaware, New York, Massachusetts and Nevada feared that the settlement would preclude further investigations, and would wind up being a gift to the banks.

That’s why any settlement must be tough, truly beneficial to borrowers and monitored for compliance. Otherwise, the deal would be another case where our government let the big banks win while Main Street loses.

So where does the help come from? Why is the government backing off big banks and what precedent does this set for the future?

I guess it’s true what money can buy you.

Please share your thoughts.