

Without considering the guilt or innocence of the five major banks involved, the Obama Administration is poised to let Wall Street off the hook for foreclosures where as many as one million borrowers were "harmed" by robo-signing practices.

In a three-author article, the Wall Street Journal was abuzz over the impending settlement which will grant immunity for innumerable counts of robo-signing violations in exchange for loan "haircuts". Quoting HUD Secretary Shaun Donovan, the Journal glowingly describes the deal as the largest principal reduction of the crisis, promising a million borrowers a share of some $19 billion in relief on their loans:

"As part of the proposed settlement, Mr. Donovan said, a "number of families" who were harmed by foreclosure-processing mistakes would be directly compensated by banks."

The banks would also agree to reforms, as part of the practice of "deferred prosecution" that Obama has continued from the Bush era. Often left to secret back-room wrangling, the settlements between Wall Street giants and the SEC or DOJ have shown great tolerance for the reckless behavior that drove the US economy into the ditch.

With banks paying fines that represent tiny fractions of their annual profit totals, the settlements have been considered a nicely manageable cost of doing business. But with a preponderance of industry flacks winding up regulating their former firms, public outrage hit new highs this fall.

Finally, we saw NY District Court judge Jed Rakoff saying "enough!", infuriated that courts and federal agencies have simply stopped bothering to determine whether or not crimes were committed as they approved a profusion of immunity deals. As a result, Citigroup was denied a $285 million immunity settlement for alleged securities fraud and may have to prove their innocence at trial, risking a multitude of investor lawsuits should they lose.

NY Attorney General Eric Schneiderman has been leading the charge to hold banks accountable for their destruction. Since last August he has opposed Obama's proposal to grant immunity to Citigroup, Bank of America, JPMorgan Chase, Wells Fargo and Ally Financial for robo-signing, an unauthorized practice that had become such an open secret, it became an industry standard.

As it happens, four of the five banks involved in the settlement were clients of the DC law firm where both Attorney General Eric Holder and Lanny Breuer, the current head of the DOJ's criminal division, were partners. Reuters and Huffington Post also report here that Holder opposed investigations into robosigning despite evidence of massive volumes of forged or improperly notarized documents going back to 2010, the same year deputies under both Holder and Breuer went back through the revolving door to return to the same law firm.

