It's been clear for some time that the proposed agreement between the 50 state AG's and the banks and servicers is going to be a whitewash, a get-out-of-jail-free card, and an absolution of past sins all rolled into one. But the Calgary Herald reports comments made by Tim Geithner yesterday, which pretty much seals the deal. Geithner told the Senate Banking committee that a fraudclosure deal had to be reached quickly:
- "It is very important that we try to bring this to bed as quickly as we can. I think all parties, not just the servicers, but the state AGs and the federal agencies have a strong stake in doing that.
Shahien Nasiripour also reports that the state AG's have been working hand-in-glove with the Obama administration and the various regulatory agencies in crafting the deal with banks and servicers, with the administration calling it a "shock and awe" approach that would lead to a potential $30B in reduced mortgage payments.
Clearly this is another Obama trial balloon. Luckily, we can count on Yves Smith to pop it. See here:
Yves points out that the proposed deal "reads like HAMP 2.0. Notice that the banks are NOT being required to make principal mods. The story simply states, 'reduce monthly payments.' So the $30 billion is presumably for a combination of servicer costs, payment reductions, and some second mortgage writedowns."
The fact that Geithner and the administration are now pushing to get a deal done -- any deal -- as quickly is possible, is highly suspicious. If we didn't know better, we would be inclined to think that Geithner and friends want to grant absolution to the banks and servicers before groups like Anonymous and Wikileaks are able to stir up any more trouble. As we discussed earlier, the BofA insider who is leaking documents and information to Anonymous has the potential to blow the fraudclosure issue wide open, exposing banks to many billions of dollars in liabilities. It would come as no surprise that Geithner would like to prevent such a scenario at all costs -- the rule of law be damned.
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