Federal officials this week are moving to finalize a settlement with banks over the “robo-signing” scandal, and activists say several banks accused of processing fraudulent foreclosure documents in recent years made a record $144 billion in payouts to employees in 2011.
Housing and Urban Development (HUD) Secretary Shaun Donovan met with state attorneys general in Chicago on Monday to gather support for a proposed settlement that regulators have been negotiating with banks for the past year.
Observers predict the $20 billion to $25 billion settlement could be announced this week, much of which would go to helping borrowers – many of them families struggling to keep their homes – reduce principals on loans. The settlement would cover five lenders: Bank of America, Wells Fargo, Ally Financial, JP Morgan Chase and Citigroup.
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Protesters gathered outside the meeting to demand a tougher settlement for banks that continue to pay out millions to executive staff.
“Will they settle for a deal that benefits the one percent and lets the big banks off the hook?” asked Chicago community organizer Rev. Marilyn Pagan. “Or will they stand with the 99 percent and fight for accountability and a solution that will help millions of people?”
Details on the proposed settlement and attendants at the meeting remain murky. Spokespeople for Illinois Attorney General Lisa Madigan and HUD did not respond to inquiries from Truthout.
Meanwhile, the mainstream press has reported the CEOs of America's biggest banks received smaller bonuses in 2011than in recent years after lackluster stock performance, but when compensation and stock packages are factored in, the nation's six biggest banks made record payouts in 2011.
The six banks – JP Morgan Chase, Goldman Sachs, Morgan Stanley, Wells Fargo, Citigroup and Bank of America – paid out $144 billion in compensation and bonuses in 2011, according to a report released by the New Bottom Line (NBL) campaign. The 2011 payout is second only to the $147 billion paid out in 2007 during healthier economic times.
About half of the $144 billion paid out would be enough to write down the principals on every underwater mortgage in the country, according to NBL.
The Associated Press reported that bonuses for top bank CEOs are down this year, but some banks made up for smaller bonuses by increasing base salaries. NBL reported that Goldman Sachs executive officers saw their base salaries more than triple in 2011, and salaries for executive officers at JP Morgan Chase increased by 50 percent.
Even the smaller bonus packages would look handsome to anyone in the middle class: Morgan Stanley CEO James Gorman, for example, received $5.1 million worth of stock for 2011, about half of what he received for 2010.
Activists are calling attention to the record payouts as federal officials race to finalize a settlement with banks over the alleged robo-signing of foreclosure and loan documents. In 2010, attorneys general from 50 states began investigating banks suspected of systematically processing fraudulent foreclosure documents without proper review.
Protesters at a settlement meeting in Chicago say the Obama administration is poised to let the banks off too easy with a $20 billion to $25 billion settlement. Activists say the banks should pay out a minimum of $300 billion, and the $144 billion in payouts proves they can afford it.
“Either they have the money or they don't,” said Tracy Van Slyke, a NBL spokesperson. “They should be paying their fare share.”
The protesters also oppose negotiations that would provide the banks immunity from criminal charges in future lawsuits and are calling on the Justice Department to conduct its own in-depth investigation.
Van Slyke joined the protesters in Chicago on Monday as HUD Secretary Donovan met with Illinois Attorney General Madigan and others to discuss the settlement, which, Van Slyke said, the officials could be rushing to finish before President Obama delivers his State of the Union speech on Tuesday.