$470 mil HSBC settlement, but no one is in jail

NOVANEWS


The federal government announced a $470 mil settlement with banking giant HSBC on Friday, despite causing financial crisis worth $22 tril
American Herald Tribune 
Banking giant HSBC has reached a settlement with the Federal government and most U.S. states for their part in the 2008 financial crisis—the largest such economic downturn since the Great Depression.
But as with Bank of America, Goldman Sachs and J.P. Morgan Chase, no individuals will face trial for engaging in predatory lending tactics, selling bad mortgages to homeowners and forcing illegal foreclosures on millions.
The Justice Department announced the $470 million settlement on Friday, saying that HSBC’s tactics hastened the country’s economic meltdown.
The settlement includes the Justice Department, the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau as well as 49 state attorneys general and the District of Columbia’s attorney general.
In a Justice Department press release, Iowa Attorney General Tom Miller states that such a settlement serves as precedent for how banks are allowed to behave.
“This agreement not only provides relief to borrowers affected by HSBC’s past practices, it puts in place protections for current and future homeowners through tough mortgage servicing standards,” Miller said. “For years we’ve worked together to hold mortgage servicers responsible for their past conduct.  We’re doing that here through this settlement and we’ll continue to address bad conduct in the future.”
According to the terms of the agreement, HSBC’s payments will include $100 million to be distributed between the federal government and a state-administered escrow fund, allowing the states to reimburse borrowers who lost their homes to foreclosure between 2008 and 2012.
Another $370 million in relief is slated directly for borrowers and homeowners in order to reduce mortgage principals for those at risk of default. The federal government says this relief is already underway, noting that the actual cost could be higher because HSBC cannot claim credit for every required consumer relief dollar.
2013 study by the Government Accountability Office, funded by a cost-analysis stipulation of the Dodd-Frank financial reform law of 2010, found that the economic crisis cost the American economy $22 trillion.
HSBC will be responsible for implementing standards for mortgage loan servicing, foreclosure procedure and ensuring accuracy of information provided to federal bankruptcy court, according to the federal government.
The deal unfortunately gives HSBC leeway in how it imposes the new standards.
In the past, the bank employed a plethora of intentionally ambiguous practices like robo-signing, false documentation and lost paperwork, in order to continue foreclosures.
The new standards also make it imperative that foreclosure is a last resort by requiring HSBC to provide loss-mitigation options first.
It is unclear how stringent the government will be in accepting applications for the state’s reimbursement plans, but the settlement will almost certainly not be a fix-all for homeowners still reeling from the economic crisis.
Tanuka Loha, then-director of Amnesty International’s Demand Dignity program wrote in 2011 about the severe consequences of the crisis.
“Since 2007, banks have foreclosed around eight million homes. It is estimated that another eight to ten million homes will be foreclosed before the financial crisis is over.  This approach to resolving one part of the financial crisis means many, many families are living without adequate and secure housing.,” Loha said. “In addition, approximately 3.5 million people in the U.S. are homeless, many of them veterans. It is worth noting that, at the same time, there are 18.5 million vacant homes in the country.”

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