Why the secrecy? Why the haste? Rushing into an ill-advised settlement with the banks may undo one of our last chances to avert another economic catastrophe.
Tomorrow is the deadline for state attorneys general to sign on to a joint federal and multi-state $25 billion settlement of the robo-mortgage scandal. The settlement will involve Ally Financial Inc. (formerly GMAC), Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and Wells Fargo & Co. The details of the proposed settlement have not been released. However, one thing is clear: This settlement puts the nation at further risk of another systematic financial crisis and runs counter to any notion that the actions of the Obama administration will reflect the president’s newly energized populist rhetoric.
As a nation, we need to ask several questions. As a participatory democracy, we also have the right to the answers before any settlement is inked:
1. In his State of the Union Address, President Obama announced a new financial crimes taskforce, yet the administration is rushing to finalize this settlement before the taskforce begins its work. Why?
2. What is the public interest in releasing banks that have openly admitted they broke the law in tens of thousands of separate instances from liability?
3. The bank narrative has been that the robo-mortgage scandal reflected procedural issues of no consequence (despite the fact that they constituted fraud, perjury, conspiracy, and a knowing effort to mislead the court). Recently, a new narrative has emerged that suggests these activities were actually the back-end of even greater malfeasance involving tax evasion and the banks’ failure to comply with basic rules in securitizing mortgages. If we are a nation where justice is blind, should we not investigate the full truth before we give the offending financial institutions another free pass?