Thursday, February 9, 2012

50 State AGs Bend to Will of Banks in Foreclosure Settlement Deal

This is the kind of market that causes financial writers to suffer a severe case of "writers block," the disease that infests the creative part of the mind because there's simply no action in financial markets.

For the fourth day in a row, the major stock indices barely budged, but managed to produce marginal gains, except for the NYSE Composite, which was down slightly. The pattern was virtually the same, with a dip in the morning followed by a quick comeback and a flat to slightly rising curve through the session. One change was that the advance-decline line favored the downside, but guess what? Options expiry is next Friday, so expect the markets to continue climbing though the middle of next week. Bankers gotta eat, ya know?

There was a bit of news from Greece, where the government finally agreed to tougher austerity measures which will reduce wages, headcount, and pensions. The deal cleared the way for talks with the troika to resume, though there are still significant hurdles to be worked out with both the public funding sources and the private ones.

The agreement did little to move US markets, which have been stuck in a regimen of low volume and little movement all week (I mentioned that earlier, I know).

In the other major development of the day, the 50 state Attorneys General announced that their deal with the five major banks involved in the sub-prime, robo-signing mortgage and foreclosure fiasco had been finalized, with the holdouts from California, New York and Delaware finally coming around to see it the banks' way.

The $26 billion deal will provide little relief to underwater homeowners (maybe $1500-2000) and offers a $2000 cash bonus to people who lost their homes to fraudulent foreclosures between 2008-2011. Anyone who paid their mortgage on time, is currently in foreclosure or falls outside those chosen dates: out of luck.

That the deal was yet another windfall for the banks cannot be understated. These banks, through shoddy originations, poor (sometimes none) documentation, fraud and other nefarious tactics, bilked the American public, the US government and mortgage-backed securities bondholders of billions, if not trillions of dollars, worldwide. The paltry sum of $26 billion spread out over a three-year span is nothing more than a rounding error for these white-collar criminals.

If there's outrage to be heard from the general public, don't count on it amounting to much as the US populace has already put up with enough government and business malfeasance the past 12 years that the screamers and shouters are already worn out from 9/11, the security state, illegal wiretaps, TSA gropings, the Iraq and Afghanistan wars, etc. The list goes on and on and the American public has virtually resigned itself to the fact that resisting the influence of a broken, fascist federal government is tantamount to economic suicide and hardly worth the effort.

Little by little, the feds have taken away essential liberties granted by the constitution (that "piece of paper" as GW Bush called it) and are in the process of shredding every last ounce of fight and goodness that typified the America of yesteryear. It's depressing, but blatantly obvious that the direction of the country is careening quickly toward an oligarchy in which the well-connected, well-heeled are treated far differently than the poor working slobs. Money is power and the feds know this well. This is the most corrupt government in the world and neither the Democrats nor the Republicans have a monopoly on the corruptive power as they both drink from the same hose: that of the rich, in deference to the citizenry.

The only potential upside to the plight of the average American is that the federalistas are hopelessly incompetent, so compliance with all their rules, regulations, edicts and taxes can generally be avoided with a little bit of ingenuity and a good dose of umbrage. The downside is that as federal tax revenues decrease (a logical occurrence and already well underway), the bureaucrats and oligarchs will become even more oppressive and brutal. Those of us wishing to stay and fight or hope for the best had better be prepared for another decade of distrust, distortions and dishonesty from the top down, though, as Americans - and others - have been noted for in the past, defiance of officials and mendacious governance can be a powerful elixir for those who have been harmed.

Today's "settlement" with Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial (formerly known as GMAC) is nothing more than a cover for the inadequacies of our elected Attorneys General, who found it more expeditious to glad-hand their political donors than follow the rule of law. What a shame. America used to be such a nice place.

Dow 12,890.46, +6.51 (0.05%)
NASDAQ 2,927.23, +11.37 (0.39%)
S&P 500 1,351.95, +1.99 (0.15%)
NYSE Composite 8,081.25, -1.73 (0.02%)
NASDAQ Volume 2,148,275,750
NYSE Volume 4,058,775,250
Combined NYSE & NASDAQ Advance - Decline: 2687-2940
Combined NYSE & NASDAQ New highs - New lows: 289-13 (no comment)
WTI crude oil: 99.84 (really?)
Gold: 1,741.20, +9.90
Silver: 33.92, +0.21

No comments: