Shahien Nasiripour of Financial Times reports that the fifty forty-six state group of attorneys general lead by Iowa's Tom Miller has offered the banking industry new settlement terms in their negotiations around robosigning. As has been feared, Nasiripour reports that the Miller group is offering a release not just on robosigning and loss mitigation problems, but securitization fraud too. Nasiripour reports:
The talks aim to settle allegations that banks including Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial seized the homes of delinquent borrowers and broke state laws by employing so-called “robosigners”, workers who signed off on foreclosure documents en masse without reviewing the paperwork.Keep in mind that the largest outcry from Eric Schneiderman and a few other AGs to the direction of the Miller talks was that they were going to include release for areas beyond the issues at hand without there being any investigation into the depth of wrongdoing. Looks like Schneiderman was right about the direction Miller was taking the settlement negotiations in. Worse, the banks are rejecting this release of liability:
State prosecutors have proposed effectively releasing the companies from legal liability for allegedly wrongful securitisation practices, according to five people with direct knowledge of the discussions
However, the banks – some of whose share prices have been battered by concern about their exposure to mortgage-related litigation – are pressing for immunity from a raft of alleged civil violations and have called the latest proposal a “non-starter”.Naturally. With both Miller and the Obama administration seeking to have this problem behind them as swiftly as possible while leaving the current banking system untouched, it's likely that the banks will be able to get more concessions out of Miller. But since people like Schneiderman, Beau Biden of Delaware, Catherine Cortez Masto of Nevada, and Martha Coakley of Massachusetts aren't going to play ball on a deal that prevents them from doing their own investigations into securities fraud, I don't know the value of further concessions, at least in so far as getting a deal that actually covers all fifty states. As long as there is no agreement about what banks get released from and how much it will cost them to get such a release, there will be no settlement deal.
They say the proposals from state prosecutors will need to be expanded before striking a deal, which is expected to involve a total penalty of $10bn to $25bn.
