Joe Nocera had a good column today on the failure of the Obama administration to deal effectively with the foreclosure crisis fiasco. Here’s an excerpt:
It’s been five days since Jessica Silver-Greenberg’s article on the latest bank settlement was posted on The New York Times’s Web site. I’m still shaking my head. Her “story behind the story” of the $8.5 billion settlement between federal bank regulators and 10 banks over their foreclosure misdeeds illustrates just about everything that is wrong with the way the government has handled the Great Foreclosure Crisis.
Shall we count the ways?
1. It is more about public relations than problem-solving. Pick a program — any program — that the Obama administration unveiled to help troubled homeowners over the past four years. Not one has amounted to a hill of beans.
2. Accountability? What’s that? We have known for a long time that overwhelmed bank servicers took shortcuts, like robo-signing, that violated many state laws… All this settlement does is push those misdeeds under an $8.5 billion rug.
3. It won’t actually help anybody… The government is going to distribute $3.3 billion dollars. It comes to around $868 per lost home… for those who lost their homes because of bank misconduct, it doesn’t come close to making them whole.
4. The money is being distributed with no regard to whether a borrower suffered harm... The foreclosure review never answered the key question: which borrowers had legitimate claims against their bank and which didn’t… If you lost your house in 2009 and 2010, you are going to get money — whether the bank was culpable or not… As a result, those who really were truly harmed by bank behavior will be shortchanged…
People who do these kinds of settlements regularly say that the world has become so complicated that, more often than not, it is simply too expensive to figure out who was harmed and who was not. So best just to throw a little money at everybody and make the problem go away.
That is what the federal government did last week in its settlement with the banks. It’s nothing to be proud of.