The recent banking settlement that was announced has got many people scratching their heads. On one hand, the White House went after Wall Street banks with varying degrees of success over the last several years over everything from malfeasance during the initial housing crisis, to the so-called “robo-signers”, a travesty of due process that banks overburdened by foreclosure paperwork instituted that unceremoniously (and often illegitimately) kicked people out of their homes. The settlement will require banks to provide individuals relief from their mortgages, and will provide people that were allegedly victims of a foreclosure scam a check for between $1,500 and $2,000. This feels like a political move for an administration in an election year rather than any real justice for the homeowners that have been the real victims of “big finance”.

First of all, forcing companies to simply write checks is always dubious, from my perspective, as an avenue of justice. Banks are required to cut a check for a couple thousand dollars to any homeowner that reports that they were a victim of “servicing abuse” in the last three years, and as a result, lost their home. First, there’s almost no accountability in the process, with banks simply cutting checks to anyone that checked the right box. Second, for those individuals that were actually victims of abuse by lenders, $2,000 is hardly reparation for something that may have amounted to thousands, or even hundreds of thousands, in losses. It seems like a pretty expedient proposition, and one that doesn’t really do the crime justice.

The other part of the settlement would require banks to allow homeowners that are underwater on their houses (owe more than the hosue is worth) to refinance their loan at a lower rate so that they can more easily pay it off. This will happen for about a million homeowners around the country, those that are current on their mortgages. In other words, these measures, designed to offset the pressure of high mortgage payments on a home that is no longer worth the amount they initially borrowed, will only go to the people already able to pay their mortgages. They’re “relieving” those customers that don’t necessarily need the relief, and there’s been no explanation as to why.

This settlement, although undeniably a step in the right direction, has all of the hallmarks of an expedient political ploy, rather than a true carriage of justice. It came quickly, and it came with only provisional support for some of the people that were victimized and only for a portion of the injustice levied against them. Obama’s in an election year, and it seems that his campaign/administration believed that making banks pay a pittance for sinking the economy and railroading homeowners will buy him a few extra votes on the ballot in November. Unfortunately, he’s probably right.