After the Big Bank Settlement, It's not Over

When government officials and big banks announced the details of a $26 billion mortgage settlement in February, many assumed homeowners would get some welcome relief. Not many people were paying attention to what would happen with the financial fraud task force or potential bigger "Round 2" in the settlement. They should be. Eleven million homeowners are still living with underwater home mortgages, and they vote. Millions of underwater homeowners live and vote in Nevada, Florida, Ohio, Pennsylvania, and other crucial swing states to the presidential race. Many of them feel like neither party is helping them recover. Mike Lux is encouraging the current administration to pay attention.
Here’s the most important question in my mind: is the White House paying enough attention to this? I know from my experience in the Clinton White House that once a decision is made to move forward on a major new initiative like the settlement and fraud task force, that sometimes the sense of urgency fades and senior staff tend to move on to new issues, problems, and crises -- they assume whoever they appointed to do things is taking care of it. That is natural enough given all the demands on the White House, and I sense it may have happened here. But I fear for my friends in the Obama White House that this is going to come back and bite them in the ass in a really serious way if they aren’t paying a lot of attention to it. One of the greatest weaknesses the President has going into election season, both with swing and base voters, is the lingering feeling that he and his team have been too soft on the Wall Street guys that took down this economy. The big banks making record profits and handing out record bonuses the year after taxpayers bailed them out, and while the overall economy has been terrible, has left a lasting impression with voters. The failures of the HAMP program, the flurry of bad press around the Suskind book, the unwillingness to recess appoint Elizabeth Warren as the head of Consumer Financial Protection Bureau (even though the person Obama appointed, Rich Cordray, has been terrific, he has nowhere near the profile or cachet with activists following the issue as Warren), and the lack of any prosecution of Wall Street big shots has steadily added to that image. So if nothing happens with this task force any time soon, it will be a huge disappointment and a very big deal to people and organizations working on the issue, to the reporters who know the financial beat, and to voters in general. In an election season dominated by discussion of Mitt Romney’s Wall Street background, for the President to be vulnerable on this issue would be a terrible mistake, and the way they get strong on it is to have a successful task force.
While a settlement for underwater homeowners may not be in the headlines, it's still front and center for the 11 million homeowners struggling to hold on to their homes. It's time for the administration to pay attention to these homeowners.

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