Bank Deal Benefits Wall Street, Not Homeowners
Last week, attorneys general of forty-nine states agreed to a $26 billion settlement with five of the country’s biggest banks over their shocking practices of foreclosing on and evicting homeowners without having the documentation or authority to do so. While the size of the agreement sounds stunning, the actual compensation and relief it will bring those harmed by the banks is quite small.
As part of the deal the New York Times reports, “750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for about $2,000.” You read that correctly. Americans who were thrown out of their homes by the Big Banks pushing risky loans will be compensated a whopping $2,000 for the pain, suffering, and upheaval in their lives. Put in perspective, the $26 billion looks rather paltry.
Contrasting the agreement with all the bailouts Wall Street has received, which one report believes is over $29 trillion, provides further perspective. When the banks drove themselves and the economy to the brink of collapse because of their own poor choices and insatiable greed, the bailout spigot flowed freely. Now, suffering homeowners are finally promised relief only to discover the banks have again been the main beneficiaries of a gift from the government.
Adding to the disappointment, many homeowners who suffered because of the financial crisis caused by the irresponsible activity of Wall Street Banks won’t benefit at all, as borrowers whose mortgages are owned by Fannie Mae and Freddie Mac are excluded.
The havoc wreaked on our economy by Wall Street’s reckless behavior has cost our nation trillions of dollars, but the personal costs to American families runs even deeper. The banks may view the houses as assets, but for families a home is where children are raised, memories are made, and celebrations happen. Both the government officials and banks involved in this deal need to understand this isn’t just about the cost of a house or the terms of a loan. It is a debate about the type of society we want to be and the values we hold in common. This deal fails to adequately punish the greed and selfishness of Wall Street and fails to sufficiently compensate the homeowners who saw their retirements evaporate and their families upended because of foreclosure and eviction. America deserves better.
Photo Credit: The New Bottom Line