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How Wall Street’s bad behavior hurts Main Street

Daily Ticker
How Wall Street’s bad behavior hurts Main Street

Housing and mortgage markets may have rebounded from their lows but many homeowners and investors still haven't recovered from their losses and the financial firms at fault haven't paid enough for their mistakes, says consumer activist Alexis Goldstein.

The former Occupy Wall Street activist tells The Daily Ticker that the $13 billion fine levied on J.P. Morgan (JPM) by the Justice Department was actually a "pretty good" deal for the mega bank.

Related: Another Housing Bubble? “Maybe Not in Our Lifetimes”: Robert Shiller

"Thirteen billion sounds like a lot of money but it's not if you take a step back and look at how much money investors lost," says Goldstein, who is also a contributor at The Nation.

Related: J.P. Morgan “Just the First Domino”: Bill Cohan

In the video above Goldstein explains that the settlement mashes together a number of lawsuits charging J.P. Morganwith selling junky mortgage-backed securities: a $22.5B lawsuit brought by the New York Attorney General and a $33 billion lawsuit brought by the Federal Housing Finance Agency (FHFA).

"The conditions of the settlement are secret so we don't know what the government had on J.P. Morgan...[and] Attorney General Eric Holder was having personal conversations with CEO Jamie Dimon over this deal...I don't think you should get to negotiate the terms of your own punishment," says Goldstein.

Related: “The Party Is Over” for Housing — and Bank Earnings: Chris Whalen

Goldstein says renters are the new victims in the housing market: private equity firms like Blackstone Group (BX) are buying homes and renting them out and "there have been reports that these companies are acting like slumlords," she notes.

"We're also seeing echoes of what happened in the foreclosure crisis when people would make payments on time and get foreclosed on anyway," she adds. "A lot of people are making their rental payments on time but the companies are saying they didn't get it so they're getting eviction notices."

Illegal evictions were the reason behind a 2012 $25 billion settlement between mortgage servicing companies and attorneys general of all 50 states.

Some homeowners were paid as little as several hundred dollars as compensation for illegal foreclosure -- "an insult to injury situation," as Goldstein calls it. Among those servicers: J.P. Morgan, Bank of America (BAC), Wells Fargo (WFC), Citigroup (C) and Ally Financial (GKM).

The Los Angeles Times reported Monday that employees at Wells Fargo & Co. (WFC) were under so much pressure to meet quotas that they "opened unneeded accounts for customers, ordered credit cards without customers' permission and forged client signatures on paperwork. Some employees begged family members to open ghost accounts." Wells Fargo has than 6,300 offices and a market valuation of $237 billion.

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