WaMu shareholders are
offered $25M-plus to drop claims
On the day I wrote this commentary, the New York Times reported: "The nation's biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.
All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac."
And to whom does the Times turn for expertise on the subject, but a key former operative at Washington Mutual who was with the bank in the go-go era of shoveling out subprime mortgages? Now, he gives advice on risk management:
"These shops are under siege; it's just a tsunami of stuff coming in," said Taj Bindra, who oversaw Washington Mutual's servicing unit from 2004 to 2006 and now advises financial institutions on risk management. "Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end."
What were people's homes are now "inventory" to be stockpiled even though it has a negative cumulative effect on economic recovery of the housing market.
The banks that are increasingly despised and blamed for their role in engineering the financial disaster, are now trying to play nice to change their negative image.
Explains the Times, "Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.
"Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us," said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. "It's a lot different than it used to be."
So, they are still foreclosing, but with a smile. Is it a 'lot different than it used to be'?
Just last month, Huffington Post reported, "Top executives at Washington Mutual actively boosted sales of high-risk, toxic mortgages in the two years prior to the bank's collapse in 2008, according to emails published in a wide-ranging Senate report that contradicts previous public testimony about the meltdown.
The voluminous, 639-page report on the financial crisis from the Senate Permanent Subcommittee on Investigations singles out Washington Mutual for its decision to champion its subprime lending business, even as executives privately acknowledged that a housing bubble was about to burst."
The truth is that most of the bigger banks have emerged from the financial crisis stronger than ever, with executives cashing in with higher salaries and bigger bonuses. That old saying about criminals who "laughed all the way to the bank" has to be revised because in this case they never left the bank.
More shocking has been the largely passive response by our government and prosecutors. At last, the Attorney General of New York is said to be investigating but none of the big bankers have yet gone to jail or suffered for the scams and frauds they committed. Most of the State officials who vowed to after the banks in the absence of aggressive federal actions have backed down.
So what can "we the people" do? We can do nothing and watch more of what's left of our wealth vanish, or we can join others in demanding a "jailout," not a bailout.
A well-known international banker was just arrested for a high profile alleged sex crime but not one of possibly thousands have been prosecuted for well documented financial crimes.
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