BofA and government make a deal on subprime victims

So Bank of America agreed last week to pay a $335 million fair lending settlement to the 210,000 victims of Countrywide Financial’s loan scams that led to the subprime collapse. Countrywide was bought by BofA after the crisis broke.  One finance industry analyst stated that the collapse of the subprime market brought about, “the largest loss of African-American wealth in American history.” * Countrywide “allegedly” discriminated against poor lenders, primarily blacks and Latino’s.  (“Allegedly” is a popular word with these folks---no one is ever guilty that way)

The settlement “resolved allegations that Countrywide and its subsidiaries engaged in a wide-spread pattern of discrimination against black and Hispanic borrowers” the Wall Street Journal reports. **.  Countrywide employees, like shysters throughout the industry, lied, tricked and conned poor working class people in to loans they knew would end up costing the borrower more than they could afford to pay.

Some borrowers were charged higher fees than others.   Some, the investigation found, were “steered” in to subprime loans that cost more even though they qualified for prime mortgages that people with good credit histories got.  Bank of America blames Countrywide of course and is agreeing to the settlement out of the goodness of its heart. (Remember, a corporation like BofA is a person so they have hearts). Countrywide’s practices “’Were not in keeping’ with its commitment to fair and equal treatment of customers” the WSJ adds.  BofA already paid the Federal Trade Commission $108 million as to get rid of allegations that Countrywide took advantage of more than 45,000 distressed homeowners by jacking up the cost of handling their defaults.  So first the bank screwed them when they lent them the money, then charged them exorbitant fees to handle the cost of taking the home off them.

The Justice department is having a hard time finding the victims so that this paltry sum can be doled out in compensation.  People have been thrown out of their homes, lived with relatives, rented or moved from the area and an arm of the government that found Osama bin Laden 10,000 miles away and assassinated him can’t find them.

As we read about the suicides, murders and whole annihilations of families like the guy who dressed up as Santa and wiped out 7 people yesterday we should consider how this is connected to the insecurity and savagery of the market.  I wrote of the collapse of the Subprime back in 2007 and the effect it was having on workers and the poor. The moneylenders, “earned their fees, and took their interest.” I wrote, “ And in the end they’ll own the asset, someone’s former home. I am compelled to remind folks of how this frenzy was received by Gertrude Johnson, an 89-year-old still working as a health aide.  Her mortgage, at more than $3000 was more than she could handle:

"I just wanted to be able to eat and sleep in my house and have a roof over my head", says 89 year old Gertrude Robertson, "Every day at midnight when I go to sleep, I think maybe when I wake in the morning they'll tell me to get out."***

The sums here are paltry when one considers the horror and misery the actions of these people inflict on people’s lives.  The agencies that investigate them are staffed with their their pals, people like them. It’s a meeting of the minds where the two teams get together to make this stuff go away, to give the impression that justice is done.  But no one goes to jail; no crime has been committed, the accusations are allegations nothing else.  You can’t regulate justice and fairness in a capitalist economy; it is inherently unfair. What we witnessed in the crash of 2007 and the subsequent misery it is causing is the working of the system, not an anomaly, not a mistake, not an unusual occurrence due to character flaws and greed in the abstract.  In a capitalist economy capital is king and the object of all activity is to ensure capital grows and multiplies itself.  The consequences of this activity, the damage to the environment and human society is secondary.

The settlement by BofA will not prevent further crises which are built in to a system where the means of production, distribution and exchange are privately owned and production set in to motion for private gain. It matters not that the product is human shelter, health care or transportation or the food we eat.  Housing, like all these necessities of life must be products of collective management and ownership.  This is not Utopian, as the spin-doctors of capitalism would have us believe; it is more normal to human existence than the madness of the market-----it is the only way out.

* Martin Eakes: Financial Times 3-19-07

** Victims Sought in Countrywide Case: WSJ 12-27-11

*** WSJ 3-12-07