For immediate release: February 9, 2012
Obama says this is just the start—but fails to hammer home his own federal investigation at press conference
American people want $300 billion in principal reduction and accountability for bank crimes
In response to President Barack Obama’s press conference on today’s announcement of the settlement between big banks and the state Attorneys General, The New Bottom Line—a coalition of grassroots, people of faith, homeowners, and workers—declares that this settlement is only a “paltry down payment” and were dismayed by his lack of emphasis of his own federal investigation into big banks’ mortgage crimes.
The estimated $10-$20 billion in the deal for principal reduction would reduce only about 2% of the $700 billion in total negative equity in the country. The restitution payments for those who already lost their homes is just a tiny fraction of the wealth stripped from so many families, especially families of color. For homeowners who were defrauded and lost their homes, $2,000 is too little, too late. And the three-year window for banks to meet the terms of the settlement means that there is little immediate relief for homeowners.
The New Bottom Line will keep the heat on to ensure true justice for American homeowners. Going forward:
- President Obama must ensure that his new mortgage fraud task force goes the distance this year, with the resources and leadership it needs to conduct a robust and far-reaching investigation that ultimately leads to at least $300 billion in reduced principal on underwater mortgages and $50 billion in restitution for affected homeowners;
- The President should replace the leadership at the Federal Housing Finance Agency, which has obstructed efforts to reduce principal that would save the taxpayers tens of millions of dollars.
- There must be a strong, robust enforcement mechanism in the deal announced today, with swift and severe consequences for banks that fail to live up to the terms of the settlement;
- State Attorneys General must continue investigating – together with the federal task force – Wall Street’s role in causing the housing crisis and ensure that the banks that caused the crisis right their wrongs.
- With estimates that we are only halfway through the foreclosure crisis, every public leader – from local and state legislators, to state Attorneys General, to Members of Congress – should be working to hold banks accountable for helping stop the crisis and avoid millions of additional foreclosures.
Despite its flaws, the settlement announced today is stronger than it would have otherwise been, due to a tremendous outcry from grassroots groups and the courageous stance of Attorneys General from New York, California, Nevada, Delaware, and Massachusetts, who fought hard to bring more relief to homeowners and make sure that any settlement does not allow the banks to avoid accountability for fraudulent activity not yet investigated. Due to their work and the work of many allies, momentum is building toward broad-scale relief for homeowners.
After years of failed housing programs and pressure from grassroots groups, President Obama finally publicly acknowledged that allowing underwater homeowners to get out from under the debt they are living with is key to rebooting the economy. The Administration’s new Financial Fraud Task Force will keep the investigation into illegal practices alive. And the pressure continues to mount on Fannie Mae and Freddie Mac to stop allowing the big banks to hide behind their opposition to doing principal reduction.
The New Bottom Line is a new and growing movement fueled by a coalition of community organizations, congregations, and individuals working together to challenge established big bank interests on behalf of struggling and middle-class communities. Together, we are working to restructure Wall Street to help American families build wealth, close the country’s growing income gap and advance a vision for how our economy can better serve the many rather than the few. Coalition members include PICO National Network, National People’s Action (NPA), Alliance for a Just Society, and dozens of state and local organizations from around the country.