Money Minute: Banks come out ahead in deal [Video]
At last, there’s a deal on the table. Five of the biggest mortgage lenders have agreed to pony up $25 billion to settle allegations that they cut corners while foreclosing on people’s homes.
About $5 billion would be cash payments to states and federal authorities, $17 billion would be pegged for homeowner relief, roughly $3 billion would go for refinancing and $1 billion would be paid to the Federal Housing Administration.
This is good, as far as it goes. And homeowners can certainly use some help. But it’s the banks themselves that may be the biggest winners.
First of all, the settlement allows them to largely put this mess behind them, which should bolster their stock prices and ease investor uncertainty. It will also shield them from some (but not all) lawsuits that could emerge from the so-called robo-signing of foreclosure papers.
But the thing that really sticks out is the size of the individual payments. For example, Bank of America would provide $11.8 billion, followed by $5.4 billion from Wells Fargo and $5.3 billion from JPMorgan Chase.
BofA got $45 billion in bailout cash from taxpayers. Wells got $25 billion. Chase got $25 billion.
Kind of seems like they came out ahead here, doesn’t it?
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