It’s not often that you’ll see a conservative site link approvingly to a Nation article, but these are odd days. The executive summary: in 2008 Countrywide Financial/Bank of America – yes, the same Countrywide that gave sweetheart loans to Senator Dodd of Connecticut, who completely non-coincidentally decided not to run for re-election this year – entered into a 8.6 billion dollar settlement with those of its borrowers currently in financial trouble. The Nation has a variety of opinions – generally unfavorable, to put it mildly – on how well that settlement is working; but the part of the article that should really be drilled down from our point of view is the bit about how this is all being paid for. You see, in that announcement Blumenthal indicated “This settlement will cost BofA as much as $8.6 billion, but no cost, not a dime, to taxpayers.”
The Nation calls that a flat lie:
In fact, much of the settlement’s cost has been covered by taxpayers. Bank of America is allowed to use federal incentives under President Obama’s $75 billion Home Affordable Modification Program (HAMP) toward the loan modifications it is required to make as the mortgage servicer for the Countrywide portfolio. In total, of its entire Countrywide financial servicing portfolio—which goes beyond the loans covered by the settlement—BofA is eligible for as much as $4.5 billion in federal incentives for completed modifications, according to an analysis by the Center for Public Integrity as reported in Mother Jones. That’s a hefty government rebate.
But wait, it gets better: in December of 2008, when two funds that would be adversely affected by the settlement (because they’d be the ones paying for it through reduced revenues) initiated a class action suit against Countrywide, Blumenthal defended the raid on both private investors and the public purse.
Countrywide was very wise to reach the settlement that it did with Attorneys General because it is in the interest of its own investors as [well as] the homeowners whose mortgages will be restructured. And Countrywide has informed us of the lawsuit and its intent to vigorously defend against it, as it should.
In other words: Blumenthal – and CA AG Jerry Brown, who started this ball rolling in the first place – wasn’t about to go back on what is turning out to be a pretty sweetheart deal for Countrywide. While this is actually sort of sweet – politicians staying bought, that is – surely they could have found a better patron than a notorious mortgage company?
Moe Lane (crosspost)
PS: It will be interesting to see whether The Nation’s outrage at these shenanigans will translate into support for Linda McMahon for Senate and Meg Whitman for Governor. Preliminary guess: don’t hold your breath.