Politics & Policy

The Nation: Blumenthal Agreed to Flawed Settlement

Ed Patru, chief spokesman for Linda McMahon, is circulating a new story on the Nation’s website about Bank of America’s settlement with the states’ attorneys general, including Dick Blumenthal:

Richard Blumenthal, attorney general of Connecticut, one of the original parties to the suit, seems to have missed it entirely, claiming in his October 2008 announcement, “This settlement will cost BofA as much as $8.6 billion, but no cost, not a dime, to taxpayers.”

In fact, much of the settlement’s cost has been covered by taxpayers. Bank of America is allowed to use federal incentives under President Obama’s $75 billion Home Affordable Modification Program (HAMP) toward the loan modifications it is required to make as the mortgage servicer for the Countrywide portfolio. In total, of its entire Countrywide financial servicing portfolio—which goes beyond the loans covered by the settlement—BofA is eligible for as much as $4.5 billion in federal incentives for completed modifications, according to an analysis by the Center for Public Integrity as reported in Mother Jones.

Patru elaborates in an e-mail to the press:

But here’s the kicker…and this is not in the report: even after it was brought to his attention that Countrywide was literally passing the buck to public employees and taxpayers, Blumenthal took Countrywide’s side. In a December 3, 2008 report, Blumenthal is quoted saying, “Countrywide was very wise to reach the settlement that it did with Attorneys General because it is in the interest of its own investors as [well as] the homeowners whose mortgages will be restructured. And Countrywide has informed us of the lawsuit and its intent to vigorously defend against it, as it should.”

The report provides difficult-to-ignore evidence that Blumenthal really is the epitome of a grandstanding politician. And given that it’s published in a decidedly left-of-center publication, it will be difficult, to say the least, for him to suggest this one was “concocted by right wing think tanks.”

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