Nevada Attorney General Catherine Cortez Masto made the right decision earlier this month when she signed the $25 billion “servicing” settlement between 49 of her fellow attorneys general and the big Wall Street banks. No state was hit harder by the foreclosure calamity than Nevada, and nobody is to blame more than these banks, whose reckless disregard for law contributed to the collapse of our national economy, making Nevada ground zero in the housing crisis.
Under immense pressure from the Obama administration, the banks and even many leaders here in Nevada, Ms. Masto never wavered in her resolve to prosecute the banks and mortgage servicing companies who committed crimes against Nevadans. While some have criticized Ms. Masto for taking this deal, the reality is that she held out for the one thing the banks feared most: A vigorous and complete investigation into their illegal practices.
Let’s look at the deal.
First off, it’s important to remember that the $25 billion settlement will not end the investigations into how Wall Street crashed our economy. Nor will prevent it fines and prosecutions. It is simply a down payment. Indeed, the settlement empowers attorneys general across the nation to continue their investigations and open new investigations as needed.
The settlement was never intended to provide restitution to every person in the United States who has ever dealt with mortgage fraud.
In fact, because of Ms. Masto’s strong efforts to stand up to Wall Street on behalf of homeowners in Nevada — and because of the efforts of progressive organizations nationwide — there is no question that this is a better deal for homeowners and taxpayers now than just a few weeks ago when a deal seemed imminent.
The original settlement on the table called for one lump sum payment and blanket immunity for banks and mortgage servicing companies. Almost every state in the country was ready to sign on, and the country was perilously close to a deal that let banks off the hook. Instead, we fought hard here in Nevada to remove that blanket immunity, and we won. Additionally, over the next three years, banks must write down mortgages. This is a good first step that puts attorneys general in the best position possible to continue their work.
So, what now?
There are millions of aggrieved homeowners and families who were crushed by Wall Street greed, and many of them remain understandably disappointed in the deal. The total outstanding “negative equity” in the U.S. housing market — that’s the amount that we’re underwater — is $750 billion. A $25 billion settlement is not nearly enough, and we need to push for solutions that will ensure things get better for homeowners.
There are two parts to the fundamental solution. The first one, which is huge, was to make sure that Wall Street is not let off the hook. We’ve won on this front: the deal Ms. Masto signed means the Department of Justice and state attorneys general can bring those who are held accountable for this crisis to justice.
On the money side, though, we have miles to go. Wells Fargo, Citigroup, Bank of America, Ally Financial (formerly GMAC), JP Morgan and Chase will pony up $26 billion for illegal activities in foreclosing on homes between 2008 and 2011. Considering just last year the six largest banks in the United States paid $144 billion in bonuses, that’s a little like getting spanked for committing armed robbery.
Clearly, there need to be other steps taken and more aggressive action to bring more relief to the 14 million homeowners who have seen the equity they built over the years disappear out from under them. Further remedies must include forcing banks to make deep principal reductions of hundreds of billions of dollars to immediately relieve these struggling families.
We owe Catherine Cortez Masto a debt of gratitude for fighting to make sure the banks weren’t let off the hook. With this part of the work behind us, we must keep moving forward to figure out how to find justice for homeowners while ensuring Wall Street pays the full cost of their crimes.
The fight isn’t over. Let round two begin.
Bob Fulkerson is coordinator of Nevadans for a Fair Settlement, a coalition of faith, labor and progressive organizations working to ensure taxpayers and homeowners are prioritized over Wall Street banks..