President Obama, Governor Romney and their backers may be spending hundreds of millions of dollars to live in the most expensive and exclusive house in the nation, but they aren't saying enough about the fact that housing in America is broken. Despite what the media and candidates might have you believe, real estate, home ownership and mortgages are the most important issues of the coming presidential election. No one, however, is really talking about how it broke, who is responsible or what should be done with them. Worst of all, they're not talking about how to fix it. Really fix it.
Across this nation there is marked frustration with the persistent and toxic residue of the Great Recession. Some 12 million Americans find themselves $700 billion under water—their homes threatened by foreclosure. There is a general sense that the $26 billion settlement by which the five major mortgage-servicing banks escaped further liability on some issues was more a victory for the banks than it was for the government or the public. And, just last week another settlement in a class-action suit against Bank of America was challenged, after its $20 million award was agreed to by the lawyers in New York.
That litigation was brought by pension funds seeking redress for nondisclosure of Merrill Lynch's disastrous financial condition at the time that it was purchased by B of A—a condition that resulted from Merrill's real estate and mortgage investments. Lawyers in a collateral case that would be extinguished by such a settlement raised several objections—two of which revolved around charges of collusion, and the fact that the New York settlement involved no payment by individuals.
Those plaintiffs are frustrated—like everyone else. There's a general feeling that people who should be on opposite sides of a barbed wire fence are actually winking and nodding at each other. With all the lawsuits and settlements that have already occurred, and are ongoing at this moment, there are precious few individuals who have been called to account by a civil court, and while the $26 billion settlement allows officials to pursue additional lawsuits, virtually no one has been prosecuted criminally.
Instead, for the most part there have been a number of settlements and fines paid by institutions rather than individuals. Those payments have generally been infinitesimal in comparison to the magnitude of the collapse, have had very little effect on the problem itself, and in most cases were made by financial institutions that benefited directly or indirectly from the taxpayer bailouts of 2008 and 2009.
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In other words, everyone can hear the piper but only the taxpayers are paying him. It sure seems like the bad guys are slithering away yet again. And that's the real issue. It seems like the people who looted our nation and took away the American dream are getting away with it. And we all know it… including the presidential candidates. It's the elephant in the room. OK, it's the donkey in the room, too.