Tell Obama: Just Say "No" To Bank Sweetheart Deal

By Robert Borosage, cross-posted from Campaign for America's Future

Americans from across the political spectrum are angry that the Wall Street banks blew up the economy and got bailed out, while home owners and taxpayers were stuck with the bill. And now, with fresh reports today of a pending state attorneys general settlement with the big banks that would immunize them from prosecution and civil suits in exchange for $25 billion, largely for principal reduction for underwater homeowners, the Campaign For America’s Future has joined in a broad coalition to oppose any sweetheart deal.

We're asking you to send an email to President Obama right now: Reject the sweetheart bank settlement. Do not follow through with your plan to announce it in the State of the Union address Tuesday. Instead, investigate the banks that caused the housing crisis.

This is an issue that raises a fundamental question about the nature of our justice system and the nature of our democracy. The law is respected only if it is enforced. Cutting a settlement with the big banks before we understand the scope of what the FBI has called "an epidemic of fraud" violates our basic sense of justice. No one who robbed a bank would be offered immunity, a modest fine and no admission of guilt before there was any investigation into who stole the money and how much they took.

And for our democracy, politically Americans are increasingly cynical about the ability of Washington to deal with special interests. They increasingly believe Washington can be bought and sold by Wall Street. This is destructive to our democracy. The President’s campaign will sensibly highlight his commitment to fair rules and a fair shot for every American. Needless to say, a sweetheart deal with the banks would be a glaring contradiction to that theme, and any deal enforced over the objections of the most independent attorneys general, such as New York’s Eric Schneiderman, will fail that test.

What the people want is clear: Investigation before immunity. Penalize the perpetrators, not their victims. Any settlement must have sufficient scope to deal with the scale of the problem. There is an estimated $700 billion of negative equity in underwater homes. While 1 million homeowners have been helped by efforts to save homeowners, 10.7 million homeowners are underwater and that does not count people who have already suffered foreclosure. The top six banks paid bonuses worth $140 billion last year alone; experts conservatively estimate this totals $420 billion over the last three years. They hold assets of $9.5 trillion. The rumored settlement of $25 billion is barely a slap on the wrist.

It is vital to this country that the banks are made accountable. It is vital that they do not see the law as simply a minor price of doing profitable business, a speed bump on the way to their bonuses.

With Occupy Wall Street inspiring activists and with citizens across the country being asked to pay to clean up the mess the banks created in the economy, every state attorney general and the Obama administration should understand that any deal will receive widespread public scrutiny. Any settlement must be able to satisfy the standards of justice and fairness. What is now on the table does not come close.

Act now: Tell President Obama: No sweetheart deal for the banks in the State of the Union address.