Policy Updates: Sept 5-9

The Numbers

Congress approval at all time low: 13%

Obama approval at all time low: 38%

Food stamp recipients at an all time high in May: 45.8 Million

Number of jobs created in August: 0. First time since WWII we’ve hit 0.

Number of bank executives prosecuted, indicted or imprisoned due to fraud: Zero

Approx number of homeowners or individual brokers prosecuted, indicted or imprisoned for mortgage fraud: 31…in the last 3 weeks.

70 bank failures this year so far (September 2, 2011). That’s behind last year’s record number but still a way ahead of years like 2006, when there were none.

Homeownership at lowest level in at least 13 years. 65.9%; Morgan Stanley says that’s optimistic, if you factor in those delinquent homeowners and the real number is more like 59.2% the lowest level since 1965

Debt Ceiling and Super Congress:

The Super-committee met for the first time this week in an public meeting with opening statements from the members and time to discuss structure. They were interrupted by Code Pink yelling loudly from the hall-way calling for jobs and taxing the wealthy! Yay Code Pink!

Attached is a two pager that outlines the basic mandate of the committee, the members and the deadlines they have to meet.

Bank of America

Are you suing Bank of America? If you answered “no” you’re in a minority. Here are just some of the groups that currently are:

FHFA (Fannie Mae and Freddie Mac)
State of Nevada
State of New York
State of Deleware
Various Investor Groups
Groups of Homeowners
ING
US Bank
FDIC

Bank of America is in the hottest of the hot seats right now. Their acquisition of Countrywide and Countrywide’s vast portfolio of fraudulently underwritten and packaged has left them open to a truly breathtaking array of liability. New Blue-ray versions of “The Princess Bride” have been updated so that Vizzini’s recitation of the classic blunders, “never get into a land war in Asia”, and “never go up against a Sicilian when death is on the line, have been supplemented with “never acquire Countrywide!”

Bank of America is in trouble. Their stock price has lost ½ it’s value, their talking about firing 40,000 workers and they’ve shut down part of their mortgage business (no longer will fund small bank and broker home loans or do reverse mortgages). Last week Warren “tax me!” Buffett came to their rescue with a $5 billion investment to boost their capital, but it may not be enough.

Other Banks and the AG Settlement

While Bank of America is being sued more than the other banks, the others are not getting off the hook either. The FHFA suit alone targets 17 banks for misrepresenting the loans they packaged and sold to Fannie and Freddie.

All of the suits are putting enormous pressure on the AG’s and banks trying to work out a settlement on robo-signing. The banks continue to push for an easy settlement that lets them off the hook for all their crimes, most of the AG’s and the Administration are pushing for a quick settlement that makes them look like they’re doing something about housing and homeowners are not backing down in their fight to not get sold down the river in the process.

A primary issue is how much immunity the banks will get from a settlement. They want to be left off the hook for fraud not just on robo-signing, which this is supposed to be about, but for originations, securitizations, and chain of title and on and on. Eric Schneiderman is leading the pack of AG’s saying no way, no how. A few AG’s (mostly Schneiderman and DE’s AG Beau Biden) have said they won’t sign on to any settlement while a handful more have said they won’t sign on if the releases are too broad.

Yesterday, the banks actually walked away from the negotiating table with AG’s to protest being sued by FHFA. In addition to showing just what cry-babies the banks are, it also shows how complicated the whole thing is. FHFA isn’t even at the negotiating table and neither the AG’s or the DOJ have sway over FHFA. But the banks are seeing that an AG settlement isn’t going to make everything go away and they don’t like it.

CFBP

This week was the first hearing on the nomination of Richard Cordray to lead the Consumer Financial Protection Agency. Cordray is currently the head of enforcement for the CFPB and is the former AG of Ohio. Pretty much everyone considers him a very qualified candidate with a track record of looking out for consumers. The hearing was pretty quick and focused almost solely on Republicans and Democrats arguing about the structure of the CFPB. Remember, 44 Senators signed a letter to Obama saying they wouldn’t confirm anybody until the CFPB is hobbled. Without a Director the CFPB is not able to do a lot of their job, most importantly start writing rules and enforcement on non-bank financial companies like credit bureaus and pay-day lenders.

The Republicans seem like they’re in for the long haul and without them, the D’s don’t have a filibuster proof majority to confirm him.