Last week, the Obama administration announced a settlement with the nation's five biggest banks over charges of mortgage fraud. This settlement between the banks and 49 states (Oklahoma has not signed on) amounts to an estimated $27 billion. The sum would be paid out in the form of principal reduction and restitution checks to homeowners and people who have lost their homes to foreclosure.
Yes, this is the largest payout by the banks since the start of the financial crisis. But we know that this amount can only begin the process of rectifying the damage the banks have done. The Washington Post reports that about 1 million households will have the size of their home loan reduced. An additional 750,000 families or individuals who lost their homes to foreclosure will receive checks of about $2,000 each.
The number of households that will receive relief and the dollar amounts that they can expect are a drop in the bucket compared to what's actually needed. More than 7 million families have been displaced, one in five Americans is struggling to pay mortgages worth more than the value of their homes. And let's not forget that taxpayers funded the big banks' $700 billion bailout.
Upon hearing news of the settlement late last week, ColorOfChange Executive Director Rashad Robinson had this to say: "While this deal begins to accomplish what tens of thousands of ColorOfChange members demanded of the Obama Administration, we continue to have deep concerns. This settlement excuses the banks from paying the true costs of the damage they've caused millions of Americans."
There are a few reasons to believe the settlement is just the start of a process that eventually leads to justice: Americans who will receive assistance through the payout will still be able to participate in future lawsuits against their banks. And the state attorneys general are still able to continue their own investigations and legal actions against the banks, including New York AG Eric Schneiderman's massive lawsuit. Additionally, a spokesperson from the Department of Housing and Urban Development told The Huffington Post, "This action, while significant, is only one step of many."
ColorofChange will continue to push for full accountability and real relief. That means thorough investigations, additional penalties and indictments of individual wrongdoers. As our online community knows, Black Americans were hit particularly hard by the financial crisis and the predatory practices of the banks, whose tactics of systemic predatory lending, mortgage fraud and high interest rates contributed to the sharp reduction of Black wealth and the decimation of many Black neighborhoods. President Obama and Attorney General Holder must conduct an investigation into the banks' misconduct that matches the scale of the crisis and the damage it caused.
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