After Backlash to Repudiated Plan, No Deal Mortgage Deal Imminent

Readers no doubt saw both on this site and elsewhere that the Obama Administration was cranking the heat up on the mortgage settlements talks, and was apparently planning to go ahead with the Federal regulators inking a pact, on the assumption they’d get enough state attorneys general to provide at least a modest fig leaf. The assumption also seemed to be that the Administration could enlist Congressmen to pressure some of the current and rumored dissident Democrat AGs to fold and join the Obama camp.

That effort appears to have gotten such a large repudiation today, when the settlement terms were presented in Chicago to Democratic AGs and discussed over the phone with the Republican AGs that Tom Miller who is leading the attorney general negotiations has done a major climbdown:

January 23, 2012


(CHICAGO, Illinois) State Attorneys General from both parties, along with our federal partners, are today discussing the details of the progress we have made so far in settlement negotiations, including the terms we must still resolve. We have not yet reached an agreement with the nation’s five largest servicers, and we won’t reach a settlement any time this week.

What is intriguing here is the Miller camp claim (effectively) that there never had been a deal on the table. That contradicts the story in the Financial Times last week and a report I had gotten from an investor with good contacts on the Republican side. Since Miller has repeatedly played fast and loose with the truth, I’m not sure I believe the message implied here, that they are still moving forward on a deal, just more slowly than they had messaged, as opposed to a deal on the table came unglued and they need to regroup in a more serious way.

We will hopefully get more intelligence (or maybe just better attempts at disinformation) but I read this as an indication the deal agreed between the Federal regulators and the biggest servicers somehow came unglued. Possibilities include: someone exposed a definitional/drafting flaw (the Feds thought it meant one thing and the banks thought it meant another); someone (one of the banks?) retraded the deal; the Administration has assumed it could rely on a certain minimum number of AGs to fall in line and they regarded that minimum number as essential, and the pow wow today exposed that they are below that level.

Regardless, this is positive news, since it vindicates the courageous attorneys general who are pressing forward with investigations and prosecutions rather than trying to cover up pervasive fraud by servicers. Thanks so much to NC readers for your calls to attorneys general. You helped play a role in telling the Administration that the public will not support coverups when enforcement and reform are what is really needed.

Naked Capitalism / By Yves Smith | Sourced from

Posted at January 23, 2012, 1:16pm

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