Who Will Get the Better Deal on Housing – the 1% or the 99%?

Prior to last weeks State of the Union address, Van Jones and George Goehl wrote a blog on The Huffington Post questioning whether or not President Obama would make a “sweetheart” deal with the banks – one that would cost them far less than what they’ve cost the American homeowner, in turn for full immunity from future lawsuits.

Well, it’s been a week and no announcement has been made yet, but that doesn’t mean we’re in the clear. Big banks hold enormous power in Washington and from everything I’ve read and heard, it’s unlikely a deal that supports the 99% will ever be realized. Still, Jones & Goehl have a very good idea of what real accountability would look like and I think it’s worth sharing some of their thoughts. Here are some of the guidelines Jones & Goehl believe the administration should follow:

1. Banks must pay a minimum of $300 billion in principle reductions for homeowners with underwater mortgages and/or restitution for foreclosed-on families.

Agreed. I’ve long been an advocate for principle reductions and it increasingly seems that people are coming around to feel the same. As the blog notes, U.S. banks raked in $35 billion in profits last summer alone, while sitting on cash reserves of $1.64 trillion. With the economy still in shambles, those profits would have been significantly less had the banks not been provided with TARP money. Keeping banks strong was one reason the money was leant out, ensuring that banks remained solvent. However, the money was also intended to provide assistance to homeowners in need and only a fraction of the money made available was sent in that direction.

2. There must be a full-fledged, full-blown investigation into Wall Street financial fraud, by the Department of Justice.

I agree with this as well. It would be virtually impossible for us to avoid a scenario like this again in the future, if no one is held accountable. Those responsible need to pay for their crimes. Fines, jail time and the inability to be in a position to commit these crimes again are all methods that must be used. Sadly, to date no one from the SEC has lost their job due to their oversights, while few charges have been brought against those in the banking/finance industry, minus a handful of ponzi-schemers. Unacceptable.

3. There should be no civil or criminal immunity for the banks from future lawsuits.

Just like the second point, accountability is a must. A strong banking system is essential (no argument here) but regulations are essential. There is no reason we can’t have appropriate banking regulations in place – which still allow capitalism to thrive – but with the appropriate checks and balances. Banks that acted irresponsibly must be exposed and regulations based on those actions must be put in place. Once again, if we don’t learn specifically how we got here and hold those responsible accountable for their actions, it’s going to be extremely difficult to put the necessary measures in place to keep history from repeating itself.

Many people argue that President Obama has done a poor job in his handling of the banking/housing crisis. Standing up to the big banks, forcing accountability and not letting them off easy, will go a long way in reversing that assessment – especially, with the 99%...