Foreclosure-Gate: DoJ Pushing State AGs to Whitewash Servicing Abuses

07-11-2011 • NakedCapitalism.com/

“I would never want to go into a negotiation without solid evidence of actual misconduct to hold as leverage over my counterpart,” said Neil M. Barofsky, the former special inspector general for the Troubled Asset Relief Program, which was crafted to bail out teetering banks. “It would also be very dangerous from a public policy perspective to waive all future claims as part of such a settlement if you do not have a good sense of the size, scope and severity of the underlying misconduct.” If you don’t have a credible threat to launch a suit, why should anybody bother? The answer here is obvious: this isn’t a “settlement”; it’s a cash for a broad release (effectively, an indemnification). And since the AGs have done nada in the way of a probe, only the banks know the value of that waiver, and they won’t enter into a deal unless they think it is a bargain. And indeed, the intended deal is a “get out of liability for almost free” card: