Is the Bank Foreclosure Settlement Dead After State of the Union? (JPM, BAC, C, WFC)

Jamie Dimon of J.P. Morgan Chase & Co. (NYSE: JPM) is signaling yet another reason as to why the banks trade at such deep discounts to book value.  Dimon’s opinion voiced on a CNBC interview in Davos, Switzerland at the World Economic Forum is that the foreclosure settlement may die now that President Obama has decided to attack the banks again and to expand investigations into home lending and sales of mortgage securities.  The angle is that this could kill or delay settlement talks with the states over foreclosure practices. The move would be an unwelcome event for Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C), and for Wells Fargo & Co (NYSE: WFC) as well.

Obama’s State of the Union address this week noted that the Attorney General is being asked to create a special unit of prosecutors to expand home lending and securitization investigations.  How this will differ in reality is anyone’s guess.  The banks have been in settlement talks with state attorneys general for months and it seems that each new settlement gets blocked by some other party.

Punishing the banks for abuse is fine, but those idiot borrowers who went out and bought $500,000 homes who make $50,000 or less need to be gone after too.  There was a pressure to get everyone in a house and the cases of mortgage fraud against consumers have been extremely limited to date.  The system is punishing only the gate keepers and allowing the rioters to get away with their part in the carnage.

JON C. OGG

Contact [email protected] for any questions or corrections.