We are getting only odd tidbits out of the so-called settlement negotiations among the fifty state attorneys general, various Federal banking regulators, and mortgage servicing miscreants (meaning all of them). As Matt Stoller pointed out last weekend, the lack of transparency is troubling. Nevertheless, certain things are apparent.
1. There has not been anything even remotely resembling an investigation. As we have said earlier, the eight week Federal exam was a joke. As Adam Levitin noted:
…we don’t actually have a tally of servicer malfeasance. Neither the AGs nor the federal regulators have done the sort of investigation necessary to really know the full extent of servicer wrong-doings. Servicers might downplay the harms, but we just don’t know. This isn’t just robosigning. The banks forfeited their ability to make the “trust me” argument some point in fall of 2008.
How can you possibly settle when you don’t know the extent of the abuses? Yes, I know this is intended to be a whitewash, but in the stress tests, the Administration engaged in a lot of persuasive-looking theatrics to somewhat disguise the fact that the end result was pre-determined. This time, they aren’t even bothering to make the cover-up look credible. This is yet another sign of how the banks are effectively beyond the reach of the law.
2. The fact that the AGs and the Federal regulators have joined forces is another sign that no one has the guts to administer anything more than a slap on the wrist relative to the damage done.
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