Experts react to the foreclosure settlement

[MrCoffee]

5. How could you read those four statements and NOT come to a negative conclusion?

Elizabeth Warren - "our long national mortgage nightmare". She really didn't say that, did she?

Dean Baker - "I’m not thrilled with the settlement, since it doesn’t accomplish much" and the big kicker "In terms of the commitment of payments in the form of write-downs, we don’t have a clear counterfactual that allows us to gage how much would have been written down anyhow. We also have the peculiar situation where the banks get to pay the penalty with write-downs of debts to MBS investors."
- Do you understand what he's saying? This is important. He's telling us exactly how we're getting screwed with this settlement. He's saying that this isn't really helping homeowners, since teh banks would have written down some of the mortgages anyway. And, the real kick in the crotch, the banks get to pay for the write-downs by issuing new debt obligations to mortgage-backed securities investors. The $20 billion is a scam, pure and simple. It's a handout to the banks to let them clean up their balance sheets.

Ira Rheingold - "it doesn’t do nearly enough to solve the problem" - the problem still exists. Ira's hopeful that maybe it won't be such a big problem in the future, but maybe the banks learned something here. OK.

Karen Nussbaum - "We were hoping for much more. This is like pocket change." and "this just doesn’t add up to the kind of relief that people actually need to stay in their homes.”