Will the 50 state settlement ever come?

Over at Naked Capitalism, Matt Stoller has a piece pointing out that for nine months the press has been reporting an imminent settlement between the banking industry and the fifty state attorneys general lead by Iowa’s Tom Miller regarding robosigning and fraudulent securitization, despite this settlement never coming. Stoller writes:

And so, the moral of the story is, the robo-signing/chain of title/overall mortgage securitization liability issue is a bear of a problem. It isn’t going away. So here’s a tip to journalists writing about the housing market. Don’t trust what Bank of America, Iowa Attorney General Tom Miller, various Federal regulators, Obama officials, and probably other bank-associated parties tell you.

Don’t trust the bank-friendly conventional wisdom, because it will end up making otherwise good stories inaccurate (this goes for headline writers as well). The banks don’t know their legal liability and the regulators don’t know how to fix this problem. And everyone’s suing everyone.

While it’s certainly true that most of the parties involved are likely content to produce a settlement in the absence of fully understanding what went on, there’s an extent to which settlement is difficult in the absence of real investigation into robosigning, fraudulent foreclosures, and securitization fraud. Or rather, in the absence of the sort of investigations NY AG Eric Schneiderman, DE AG Beau Biden and NV AG Catherine Cortez Masto say they are determined to pursue, it’s hard to know what a settlement would require. But given that the banks, Miller and the administration seem to want to shut off the ability of AGs to investigate like Schneiderman et alia want to investigate, there’s an inherent tension that is likely a factor in delaying any actual settlement from being reached.

Stoller’s right – reporters need to treat claims of an imminent settlement skeptically and they need to push back on past sources who said a settlement was around the corner. Maybe a settlement will emerge in the not too distant future, but nothing in the press coverage suggests that contemporary claims are more trustworthy than those which came before.

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