STOCK MARKET WATCH, Tuesday, December 13, 2011

[Demeter]

61. Mr. President, Stop Protecting Bankers From State Law Enforcement By Richard (RJ) Eskow

http://www.nationofchange.org/mr-president-stop-protecting-bankers-these-state-law-enforcement-officials-1323700703

...For reasons known only to themselves, officials in the Obama administration have spent more than a year trying to undercut these AGs. They're pushing a deal that would end their investigations before they're even completed and would immunize bankers from criminal prosecution.

Like the Security and Exchange Commission's notorious sweetheart deals, this Obama-backed settlement would let banks buy their way out of prosecution with a slap-on-the-wrist settlement of $20 billion-$25 billion. It would also create a phony refinancing program to make it look as if banks are doing something about the tragedies they've created by promising to refinance "as many as" 300,000 underwater mortgages (meaning the real number could be much smaller than that).

It's one more get-out-of-jail-free card for criminals on Wall Street...The social damage from this deal would be enormous. Consider:

It reinforces criminal behavior: Once again crooked bankers would go unpunished. That would guarantee they'll commit these kinds of crimes again and again, knowing they'll never pay for it with their time or their money. Thanks to other soft deals like this one, big bank executives have already promised to stop their crimes (while "neither admitting nor denying wrongdoing&quot -- and then repeated them again and again, 51 times!

The victims will pay for the crimes: Bankers defrauded their own investors by concealing their own true financial picture. The money paid in this settlement deal will be paid, not by the lawbreaking bankers who got rich off their own crimes, but by the very same shareholders they defrauded.

It places the perps in charge of their own restitution: The refinancing program (for "as many as" 300,000 homeowners) will be run by the banks themselves. The last administration program designed to 'help' homeowners became a tool for banks to rip them off even more. Mortgage servicers misstated their figures in that program as much as 80 percent of the time. Bankers used it to extract more money from homeowners, then foreclosed on them anyway (often with false documents or inaccurate figures) while the Administration looked the other way.

The settlement amount is a tiny fraction of the harm caused: There are 11.1 million underwater mortgages. Homeowners still owe the banks $750 billion for housing value that has evaporated. The banks artificially pumped out real estate values, these homeowners borrowed against the inflated prices, the housing market crashed—and they're left holding the bag while bankers are holding their bonuses. And they still owe the banks all that money.

It undermines the fabric of social trust: This deal reinforces the message that there's one code of justice for the rich and powerful and another for everyone else. And that government works for the rich and powerful, while the rest of us are on our own.