Democratic and Republican State AGs Meeting Separately to Discuss Robo-signing Settlement Terms
January 23, 2012
The Democratic and Republican state attorneys general will meet separately today to discuss the settlement terms sent out last week, amidst varying criticism that the agreement regarding will be either a shakedown for banks or an inadequate answer to homeowner woes.
Monday’s meetings come after Housing and Urban Development Secretary Shaun Donovan announced last week that the pending settlement was “very close” and would benefit about 1 million families through principal reduction for homeowners and, in some cases, direct compensation for people wrongfully foreclosed upon. Depending on how many states participate, the banks could pay between $19 to $25 billion for wrongful servicing and foreclosure practices, including robo-signing.
According to the Associated Press, the settlement includes $17 billion towards principal reductions for homeowners, $5 billion in a reserve account for state and federal programs. Some of that $5 billion would cover $1,800 checks for homeowners affected by banks' deceptive lending practices. Another $3 billion or so would go towards helping homeowners refinance at a rate of 5.25 percent.
While Democrats were invited by AG Tom Miller of Iowa to meet in person in Chicago with Donovan and Thomas Perrelli of the Federal Justice Department, their Republican counterparts will speak about the terms via a conference called headed up by AG John Suthers of Colorado and AG Rob McKenna of Washington. Donovan and Perrelli will be on the conference call as well.
“This is a bi-partisan effort,” said a spokesperson for Miller, despite the fact that the AGs are splitting up on a partisan basis to discuss the terms of the settlement. “It can be unwieldy to have 50 people on a conference call,” he explained.
While all of the states AGs have been invited to their respective meetings, it is not clear all will attend. The offices of California’s Kamala Harris and New York’s Eric Schneiderman, both Democrats, have not returned inquiries for confirmation.
Harris and Schneiderman have been vocal in their criticism of the settlement proceedings. California’s participation would change the settlement amount by as much as $5 billion, considering the large number of foreclosures the state has seen. In a speech last Wednesday, Massachusetts AG Martha Coakley, also a Democrat, who has already filed suit against the five banks in question, voiced concerns that the settlement would not be adequate, though she said she was still open to the settlement.
“We never said that everyone was going to sign on,” said Miller’s spokesperson.
This is not the first time that the settlement has been “very close.” Indeed, last March settlement terms were sent to the 50 states and ultimately leaked to the press. No agreement was met at the time, though announcements that a settlement was “three weeks away” have become commonplace.
The federal agencies, state attorneys general and the nation’s five largest servicers – Wells Fargo, Bank of America, JP Morgan Chase, Citigroup and Ally Financial – had their last negotiating session on Jan. 12, and were able to finish up the documents based on that session.
Critics of the settlement span the ideological spectrum. For instance, Edward Pinto of the American Enterprise Institute, believes a settlement of $20 billion is “not based on the size of actual damages” and overblows the banks’ wrongdoing. On the other hand, consumer advocacy groups like Working America are circulating petitions asking Perrilli, among others, for a larger settlement.
“We’re getting criticisms from every side,” said the spokesperson for Miller. “For us, it’s just another day at the office.”
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