What will the AGs get in return for giving banks immunity?

By Felix Salmon
July 11, 2011
Shahien Nasiripour has an update on the talks between the big banks and the state attorneys general, with some rather worrying news.

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Shahien Nasiripour has an update on the talks between the big banks and the state attorneys general, with some rather worrying news: under the proposed settlement, the AGs are going to give the banks broad immunity from prosecution, despite the fact that they don’t really have a clue what the banks might have done wrong.

Some officials with experience sitting across the negotiating table with major banks say the government is making a critical miscalculation that jeopardizes the public interest by seeking a deal before amassing a credible threat of successful prosecution: In essence, they say, the government would give servicers a blanket pass for widespread alleged acts of fraud while extracting too little in return and operating from a relative position of weakness.

“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.”

According to sources familiar with the ongoing state and federal probes, state and federal officials have wasted months not digging into the details of the foreclosure crisis, yielding little of value in court and undercutting the lenders’ incentive to strike a settlement of greater benefit to homeowners and taxpayers.

The investigators have yet to gather many documents, conduct depositions or assemble tallies of aggrieved homeowners. They don’t yet have a good handle on the number of wrongful foreclosures, the amount of fraudulent documents filed in local courts or the volume of legal instruments processed by so-called “robo-signers,” the agents that lenders employed to process foreclosure filings en masse without examining the underlying paperwork.

“The evidence a prosecutor would use is not in the possession of the prosecution,” said one person familiar with the ongoing settlement talks.

This doesn’t really surprise me. A coalition of 50 AGs, not to mention a large number of disparate federal agencies, is never going to be particularly good at taking a focused look at wrongdoing in the banking industry during the financial crisis. The best they can hope for is to get a flavor of what the likely crimes were, and then try and extract as much as they can from the banks.

But the dangers here are obvious, especially to those of us who remember the story of Steve Rattner. Andrew Cuomo, if you recall, granted Rattner immunity from criminal prosecution in return for his testimony — and then regretted that deal later, when he found out much more about Rattner’s actions. It’s clearly in the banks’ interest to do a deal now, before a lot of detail comes out about what they did wrong; after all, this is a world where a single bad mistake can result in fine of hundreds of millions of dollars. Multiply that by thousands of mistakes and it’s easy to see why the banks would much rather pay a few billion dollars up front and put all that prosecution risk behind them.

If a deal isn’t done, aggressive AGs in New York and maybe a couple of other states could decide to start prosecuting cases individually — but the AGs don’t really have the resources to do that in all cases and against all banks, and most AGs don’t have the resources or even the inclination to do it at all. Which is why it’s important that they have all the information they can lay their hands on now, in the run-up to a global settlement. I’m already pessimistic that the settlement will actually achieve much of anything. And if it results in hugely valuable immunity for the banks, it might well be Wall Street which ends up the ultimate winner. Again.


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So after months and months of investigation by the AGs and “journalists” all over the story, the AGs found that that “foreclosuregate” was a storm in a teacup with some mid-level executives cutting corners as opposed to some massive fraud and the end of the entire mortgage market and collapse of all the banks. I seem to recollect a few people suggesting this was the case back when all the “journalists” were having orgasms over all this nonsense.

As for what Barofsky says, it amazes me it even is a question that AGs should consider prosecuting a case “without solid evidence of actual misconduct to hold as leverage over my counterpart”.

PS AGs have the backing of the State, they have the resources of the State, they suffer no consequences whatsoever if a case goes against them and are not going to go bankrupt a la Arthur Andersen if it turns out there was no case to answer for in the end. I am not sure if you are being obtuse by claiming the banks somehow have all the leverage.

Posted by Danny_Black | Report as abusive

Danny Black – please read the aticle. The article says that the AGs and DOJ have not even looked for any evidence of wrong-doing. They have not issued subpoenas for documents or conducted depositions. As a result, they would be providing blanket immunity for something they haven’t investigated.

It would be somewhat like offering a suspected burglar blanket immunity in exchange for a plea deal with no jail time without even taking his fingerprints to check through the police record system.

This would be bad public policy for dealing with burglars or banks.

Posted by ErnieD | Report as abusive

ErnieD, actually that is not what they said. They said they – apparently – didn’t bother to dig very deep and apparently despite claims this is “pervasive” managed to pick samples where 90%+ had no evidence of wrongdoing.

Maybe they should have started doing some actual evidence gathering before starting with the grandstanding.

Posted by Danny_Black | Report as abusive

It is willful negligence on the part of the AGs. I can attest that I have submitted complaints to every financial regulatory body regarding the illegal foreclosure of my home and subsequent Sheriff’s sale of my home in 2009. To date I have had no response from my attorney general’s office. I was making payments in many on going HAMP trial modifications. My bank servicer illegally foreclosed on my home and sold it to themselves at Sheriff’s sale for a $100.00 credit bid. I had a judge vacate the sale. I did get a permanent modification in which the bank INCREASED my mortgage balance by tens of thousands of dollars in illegal junk fees. That was on April 1st 2010. (Ironic, no?) Subsequently I have demanded in writing that the bank explain the fees among other things. To date, I have had nonsensical responses. My state’s AG Paula Dow absolutely knows my complaints. I even went to the Supreme Court of NJ an submitted my affidavit of abuse I have endured. It is available on NJ courts online website. There is no way possible that NJ AG Dow does NOT know that pervasive abuse is going on in her state by the bank servicers. The systematic abuse I have endured (among thousands of others) is unconscionable. It is a land grab operating under the color of law. If the AG’s don’t know it, it is because they willfully do not want to know. My name is Jyll Jakes. I have been illegally foreclosed on, given a fraudulent HAMP loan, been financially abused and am no longer employable in my field due to grossly inaccurate credit reporting by my bank servicer. AG Dow I can prove without a shadow of a doubt that my bank servicer is guilty of fraud and I challenge you to investigate my claim.

Posted by jyllyj | Report as abusive

well so far the courts have been ruling against the banks, when the owner challenges the banks right to foreclose, and that only happens if the owner care to even bother, which a lot don’t, as they just want out of the house. but of those who do, they are winning because the banks didn’t fallow the law, they didn’t record the titles as required, they didn’t keep their paper work, as required, and when they sold the loan to investors, they didn’t fallow the contract for the sale. and since they sold the loan, hey no longer have any rights to the house, so they can’t foreclose, but the investors can’t either, as the title doesn’t show their name on it. and the banks got paid to file the paper work, they just didn’t do it. which is fraud. and not fallowing the sales contract, can also mean they are on the hook to have to buy the contract back at full price from the investors, and maybe even pay fines for not doing it. and a lot of these contracts have tax consequences for failure to fallow the contract. all in all, a huge mess. that will impact the ability of any one to buy or sell these house (titles aren’t clear). and impact the home owners who have houses around these houses (which could include you). no wonder the banks are sitting on the houses they have been able to foreclose on (even if they really shouldn’t have been able to), because no other finance company will touch them, and title insurers are leery of working on these house.
house prices will continue to fall , maybe for decades. all the AG’s and Fed’s are doing is giving blanket immunity for actions they don’t even know about. basically its just to fix the states budgets. not much more (and lots of states the AG long ago quit helping any one but companies)

Posted by willid3 | Report as abusive

@ willid3 — I agree. The states are looking for money to plug budget gaps at the homeowners expense. The Democrats in NJ submitted a budget that included a $50MM dollar settlement for Bank Fraud. Did they earmark it for Legal Aid to help troubled homeowners in court? A measly ten percent. The bulk was for Medicare. Something I’ll never benefit from at this rate. The AG’s are short sighted in their strategy. This settlement is a joke.

Posted by jyllyj | Report as abusive

@Danny Black, foreclosuregate was the largest single fraud perpetrated on the citizens of the United states (and investers abroad as well) Take your bank apologist head out of the sand and go play in it instead. Your denial is ludicrous.

PS: You were also in denial that servicers and banks could possibly make any money in foreclosing… and probably still are…

PPS: The 10% you are claiming was the number of illegal foreclosures on the part of servicers.

Felix, I have read that the states cannot do any pre-litigation discovery of National banks to get at the data, unless the banks volunteer it. I would like to know if that could possibly be true.

“In a letter on May 12 to Senator Thomas Carper, Democrat of Delaware, the agency asserted that its pre-emption regulations are consistent with the Dodd-Frank Act (see this interpretation by Sidley Austin, a law firm, which I draw on). There is a lot of legalese in the letter but the basic issue is simple — are states allowed to protect their consumers vis-à-vis national banks, or do they have to rely on the Office of the Comptroller of the Currency, despite its weak track record?

“The comptroller’s office is clear — the states are pre-empted, meaning that national comptroller regulations will always overrule them on the issues that matter. (As a technical matter, the issue comes down to what is known as visitation: whether state-level authorities can gain access to bank documents if the bank or the comptroller’s office has not already determined that there is a problem.)

The American Bankers Association was, not surprisingly, delighted: The O.C.C.’s action helps clarify the rules of the road for national banks and how they serve their customers. ”

http://livinglies.wordpress.com/2011/05/ 19/simon-johnson-occ-sells-out-to-banks- consumers-dont-count/

The excuse that the industry is being bogged down and a quick settlement would help is rather ludicrous as that says it was not only OK to screw homeowners in the past, but to continue doing so with impunity. It doesn’t give people confidence…

That is not only wrong but stupid. The same problems will continue to make people wary of buying. The banks want it settled quickly and they will probably get their wish. if so, this “tempest in a teapot” will be around for longer than my original few year estimate …

Look for decades of fallout with the housing industry continuing to falter and than you have not only banks and servisers to blame, you can blame the AGs who promised to do their jobs.

Posted by hsvkitty | Report as abusive

willid3, except they have not been “ruling” against the banks. The vast majority of cases the banks have won foreclosure cases.

hsvkitty, went through this and with your trawl of the internet you managed to come up with a grand total of 4 cases where the person was up to date on all his payments and got foreclosed on. I know you have difficulty with simple english and elementary arithmetic but once again slowly:

“Findings from the Justice Department’s U.S. Trustee Program, a unit overseeing the integrity of bankruptcy courts, that show mortgage servicers filed inaccurate claims in as many as 10 percent of bankruptcy cases.” – that doesn’t mean 10% are illegal, it means that in UP TO 10% there was some form of error which can be anything from the guy being 100% up to date to spelling his name wrong. In other words in their sample 90%+ were perfect. Given the sudden jump in the number of cases they had to deal with thats not terribly bad.

I am not in denial about servicers making money off foreclosures. I am simply not a retard and have a passing acquaintance with the mechanics, two statements which despite you reading copious amounts of BS online still don’t apply to you.

Again like claims insider trading is pervasive the stats and actual evidence simply do not back you up.

Posted by Danny_Black | Report as abusive

Sigh @Danny_Black… I don’t wish to discuss your problems admitting that banks do bad things…

Calling me a retard once again shows you are a doubly offensive jerk as well as a bank apologist.

FYI…your denial…

http://blogs.reuters.com/felix-salmon/20 10/11/24/counterparties-256/

Nov 26, 2010
12:26 am EST

“Why would a servicer deliberately foreclose on someone servicing their mortgage. Those people are the sweet spot for servicers, where they make money for old rope. People who are being foreclosed on COST the servicers money.”

Posted by Danny_Black | Report as abusive

Posted by hsvkitty | Report as abusive

hsvkitty, and the number of cases where a servicer has deliberately foreclosed on someone who was in good standing are whilst knowing they were in good standing are? So far for all your hysterical BS you have not managed to come up with single case out of the “millions” of instances you claim it happens. Not one. Now you are either aware of this and are simply a pathological liar or you are not aware of this and are retarded. Pick one.

Posted by Danny_Black | Report as abusive

ok lets actually ask someone forclosed on. jyllyj, when you were in good standing the servicer was probably earning 0.25% of your payments. Assuming average house roughly 200,000USD then the servicer is was making 500USD a year for pretty much doing nothing. Since then it has been spending money coming up with silly responses to your reasonable questions, sending out statements, attempting to threaten you, attempting to take your house away etc. For it to “make a profit” from doing this, you need to either have made some ***payments*** that are some 500USD more than the costs to them or they need to have sold your house and made enough money to keep the end-investors happy, cover their costs and get more than the net present value of the fees they would have got off you if you had remained in good standing. Doesn’t sound like either happened. Feel free to correct me if i am wrong, I obviously don’t know your personal situation.

Posted by Danny_Black | Report as abusive


You love to try to make me angry and go off topic but, I see who you are Danny. A blowhard former bankster in denial of insider trading and foreclosuregate. The only place it isn’t real and happening in in your small and narrow mind…

http://www.thestreet.com/story/11184678/ 1/foreclosure-glut-pushes-filings-into-2 012.html

http://www.mainstreet.com/article/real-e state/foreclosure/fed-fine-banks-foreclo sure-abuses

Posted by hsvkitty | Report as abusive

I tried to find the an innocuous source above, but no doubt Danny-Black will blacklist it as well, so here are some Reuters sources for info on the housing market.

http://uk.reuters.com/article/2011/07/08  /financial-regulation-servicing-idUKN1E 76614D20110708

Few MSM sites write about foreclosuregate but Reuters has a housing market site that is pretty up to date and archived. Read the last 6 months of 2011 and then deny that foreclosuregate exists or say it is a tempest in a teapot. (oh wait , that’s what you have been doing…)

http://www.reuters.com/subjects/housing- market

The reason why there have been so few lawsuits is many people couldn’t afford lawyers and were foreclosed upon, each individual case takes a lot of time, money and resources and most lawyers are reluctant to take on class actions as they are so different.

There was much relief that the AGs seemed to be the white knights taking it on, but collusion, bank interference (and possibly inability to probe or investigate properly due to lack of information available… National banks have to voluntarily disclose their info) and reluctance to take on such a mammoth task has stymied the AGs.

But it wouldn’t matter how many URL’s I added, you would seek to discredit me as I am as much against the bank’s foreclosure practices as you are for them.

Posted by hsvkitty | Report as abusive

Ok i see we are back to posting links that don’t say what you claim they do. Do you honestly believe that Reuters article says that people are being foreclosed on that should not be? Are you functionally illiterate? ( sorry for the long words but maybe your kids can explain what it means ).

Basically, when this all kicked off it seemed obvious that the fuss was about a bunch of overworked mid-level executives working on a fixed fee per foreclosure just rubber stamping docs. This was easily fixed by getting people to labouriously go through each application can dot the Is and cross the Ts, which is exactly what the banks have done. For the hysteria about how people where getting thrown out of their houses when the bank had no right to do so, the number of cases of that sort of insignificant and in virtually every case involve some sort of clerical error. As for MERS and RMBSes melting down to the best of my knowledge not a single trust has had an issue with this.

As for most of the stuff i write about especially to you it is absolute basics. I am amazed this stuff is apparently too complicated for you because apparently even monkeys are born with this ability.

Posted by Danny_Black | Report as abusive

@ danny-black, you make me laugh!

You said “a bunch of overworked mid-level executives working on a fixed fee per foreclosure just rubber stamping docs. This was easily fixed by getting people to labouriously go through each application can dot the Is and cross the Ts, which is exactly what the banks have done. ”

That truly shows what a jerk you are and how in denial you are about banks and servicers and the robo signers. The whole problem is banks didn’t dot their is or ts or follow the rule of law.

BS! Robo signers were people off the street forging those “overworked mid-level executives” signatures. One man alone found 6,000 forged documents with the name of Linda Green, signed by 22 different robo signers. Linda Green, a real person whose name was fraudulently used, was often given the status of bank manager or asst. manager of the bank , when in fact she worked for an LPS document processing company.

That you deny this after all the evidence in the news,(linda Green herself in the 60 minutes segment) here in Felix’s blog and in the URLs you SUPPOSEDLY read that I added, is ridiculous and proves you are a liar and bank apologist.

PPS: MERS can no longer foreclose being it(as “it” is a computer not a person) has been recognized to be a non entity and not representing the banks.

Posted by hsvkitty | Report as abusive

@Danny-Black, thanks so much for always making my day. You never disappoint. I will happily repeat myself to counter your lies.

Here is one of your “bank officials”, AKA: a person off the street, who is really tired of robo-signing. So much so that he wrote ” C**T” as a witness to a Linda Green signature.

http://livinglies.wordpress.com/2011/06/ 27/weary-robosigner-gets-punchy-and-vulg ar-on-signing-linda-green/

The documents and the falsified signatures
http://livinglies.files.wordpress.com/20 11/06/match-found-in-hillsborough-county -linda-green-c-t1.pdf

Even though you are trying very hard to protect your reputation as a former bankster *laughs heartily* your insistence that it is all a tempest in a teapot is pure garbage.

It is the numbers that have stymied the AGs, although you will continue to lie and try to protect the banks. Look at just one county registry of deeds and the falsified documents they found:

“…the Essex South Registry of Deeds has found
25,187 fraudulent documents that contain the signatures of more than 30 known robo-signers. These documents effect 1,282 homeowners in the City of Salem, 1,246 in the City of Beverly, 1,404 in the City ofPeabody and 795 in the Town of Danvers.”

Not the paragraph above this where the register of deeds says the banks didn’t return affidavits saying that the signatures and witnesses were correct.

http://livinglies.wordpress.com/2011/06/ 25/recording-office-refuses-robo-signed- documents/

I love repeating myself!

Posted by hsvkitty | Report as abusive

And here is a recent URl that shows the banks are STIL unable to verify who owns the note, so are filing fake documents.

http://www.reuters.com/article/2011/07/1 9/us-foreclosure-banks-idUSTRE76H5XX2011 0719?feedType=nl&feedName=usbusinessearl y

Now, because Danny will say the old lady just wants a free house (hey Danny, read the whole thing) I hope others are more responsible and will see that what is happening here is that the homes are being seized with no regard for the law.

“Even if the February document were authentic, it wasn’t recorded until nearly 10 months after OneWest had launched its foreclosure action, which began in May 2010. Real estate law throughout the United States requires that before moving to foreclose, a trust or bank must already own the mortgage and related promissory note. Otherwise, courts have ruled, a forecloser has no right to seize a house.”

Posted by hsvkitty | Report as abusive

How can there still be robo-signing when the AGs asked them to stop and abide by the rules?


http://www.reuters.com/article/2011/07/2 0/us-foreclosure-banks-immunity-idUSTRE7 6J7J820110720?feedType=RSS&feedName=topN ews

Posted by hsvkitty | Report as abusive

Nothing, you just can’t trust them.

I need to tell my story and try to inspire some courage from average Americans who are getting more and more frightened of their bully government that passes laws makes policies for the special interests: drug companies, banks, etc. and doesn’t do anything for the people that voted them in. The banks and the politicians are just concerned about 2 things, staying in power and money. Everything else is not relevant to them at all.

Hon. Democratic Attorney Generals,

I use Honorable in general to all of you. I am sure most of you are, but I have doubts on others, who are exercizing their power to only help special interests, collect campaign monies and ignore the very people that elected them in their state.

I’ve been having problems getting a modification from Bank of America and since January of this year, I’ve been put through the mill, the HAMP program, which is absolutely useless, then Bank of America said let’s try an in-house, that fell through in just 2 hours.

Then I contacted the Attorney General in my state of Connecticut who I’ve been trying to contact for months now and never got a reply from one of his staff lawyers. Then I just recently contacted them again and spoke to Atty. Joseph Chambers and he said he would send a letter to Bank of America, which he did just last week and he told us to make sure we co-operate. Well, I have been and I co-operated this time as well.

To make a long story short, I was refused again as there hasn’t been any changes since May, now we are on the fast track for foreclosure. HAMP inflates my husbands net after taxes Social Security amount of $926.00 per month to $1245.00 due to HAMP formula using a 1.25 per cent multiplier, which is absolutely ridiculous, I know a regular paycheck gets 4 extra but he gets a flat $926.00 net per month. This is what put us over the top and the difference, after cutting things from our budget is what we are short. Insanity for sure, but President Obama didn’t design it to help, just to give people the impression that he cares and is doing something. Smoke and mirrors, just as the banks use to give people the feeling that they are there to help you. Yes, they are, help you right out into the street.

I sent an email to Attorney Chambers and expressed my displeasure of the proposed immunity for the crooks and the dismissal of Attorney General Schneierman, who’s office did care and asked us to send in our paperwork including fraudulent, robo-signed Releases of Mortgage. Paperwork in Connecticut foreclosure mediation sessions will mean nothing as they will even accept Mickey Mouse signing the foreclosure documents as being certified and correct and will not allow us to speak. It’s a Kangaroo court process designed to favor banks and not homeowners. I work hard everyday, I am 61 and my husband is 62 and will be 63 at the end of the year. All of our other bills are covered, we pay them faithfully every month, we don’t eat as well as we should as we were hoping to get a few hundred dollars off per month to be able to make payments again and meet all of are bills.

My husband and I are responsible, we didn’t even buy the house until we were in our early fifties and we’ve been living here since October of 2000 and we don’t want to lose our home. If we do, that will not deter our nationwide drive to bring Bank of America down and whoever else gets in the way. I’m not mad, I’m as angry as hell and will not stop until my last breath as my husband and I try to help others, even though we couldn’t help ourself, we’ve managed to help others reach solutions with mortgage companies and we don’t charge them. We are not driven by money or greed and wouldn’t take money from people as we’ve been in the same situation and we understand.

Well, I’ve gotten off track, Mr. Chambers answered in a very rude way. A one sentence which was: George — I am not interested in these emails. Please stop sending.
First of all, I would like to point out that when the email was written on my husband’s email account, I signed it, Ronni Mandell and he wrote back George. Perhaps, he’s illiterate or just too impressed with himself and was overwhelmed. I also wrote Attorney General Martha Coakley and her constitutent office wrote and thanked me for my input and feedback, unlike Attorney Chambers.

I am issuing a complaint against the Connecticut Attorney General’s Office as I can’t write the Hon. George Jepsen directly as he doesn’t have an email, like the former Attorney General Richard Blumenthal had. All his mail is screened by the wolves in his office.
With me sending this letter to you, I don’t expect miracles as I am a realist and quite aware that people don’t care about Main Steet, just the banks, so if no reply is made to me, one way of the other, it will not surprise me, but will disappoint.

Attorney General Eric Schneiderman deserves to be put back onto the committee with Connecticut, Iowa and Illinois as he is looking for justice not to appease the banks and applaud their acts of crime. Fraud is fraud and not something to take lightly, the government prosecutes brokers, real estate agents, tellers, why not banks, they are not Gods-heaven help us if they were. Washington, however, treats them as such due to glare of green coming off of the cash-they are what you call dollar struck.


Ronni D. Mandell
West Haven, Ct. 06516

Posted by ronni723 | Report as abusive

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