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Why the Deal "Stinks"
It shouldn't surprise. Deals bankers agree to helps them, not victims. On February 9, Yves Smith's Naked Capitalism article headlined, "The Top Twelve Reasons Why You Should Hate the Mortgage Settlement," saying:
Settlement terms haven't been released, but leaked details assure few troubled borrowers will be helped compared to much greater numbers left out.
State AG suits remain unresolved and won't likely yield borrower-friendly results. The Nevada/Arizona suits were "folded into" settlement terms, effectively ending them.
(1) The maximum payout per borrower is $2,000. Its peanuts compared to amounts lost. It represents about 1% of loan balances. It's "less that the price of the title insurance that banks failed to get when they transferred the loans to the trust."
It's also a fraction of legal expenses for challenged foreclosures. Bankers made out like bandits in terms of benefits and avoiding prison time. Borrowers are stuck with a deal made in hell.
(2) The $25/26 billion "is actually $5 billion of bank money and the rest is your money." Write-downs will be almost entirely from securitized loans. In other words, investors will eat them, not Wall Street crooks.
(3) $5 billion apportioned among five banks is too inconsequential to matter.
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