On Tuesday, The Los Angeles Times revealed a questionable policy by the Federal Depositors Insurance Corporation: one that allows major banks to quietly, discretely and secretly settle billion-dollar claims for far less.
Deutsche Bank, in a settlement over unsound loans, paid back $54 million, even though the FDIC had paid out $13 billion to stabilize the fledgling institution, the newspaper reported. The LA Times wrote the government "cut a deal with the bank's lawyers to keep it quiet: a 'no press release' clause that required the FDIC never to mention the deal 'except in response to a specific inquiry.'"
The paper obtained 1,600 pages of documents through a Freedom of Information request.
In acknowledging a steady pattern of non-disclosure agreements between banks and the FDIC exists, an FDIC spokesman told the newspaper settlement agreements are the first course of action, as opposed to filing lawsuits. And, "it only announced when damage payments are large and media interest (is) intense," the newspaper quoted spokesman David Barr as saying.
Senator Elizabeth Warren (D-MA) tore into federal banking regulators last month at a hearing on Capitol Hill.
"If they can break the law, and drag in billions in profits, and then turn around and settle, paying out of those profits, then there's not much incentive to follow the law," said Warren.
Requests for comment from Pennsylvania's senators went without response. An aide for Senator Patrick Toomey (R) said they would not be able to provide Eyewitness News with a comment. A staff member for Senator Robert Casey (D) did not respond to an email seeking the senator's position on the FDIC policy.
Analyses and studies have exposed a perfect storm foreclosure scenario in Monroe County.
The county ten years earlier realized the sharpest rate of reported foreclosures statewide. Following the attacks of 9/11, Monroe County quickly became a bedroom community for those looking to escape New York City.
Financial projects designating parts of the area "Wall Street West" quickly took shape, but later fizzed.
The same can be said about cavernous school buildings with massive campuses that were erected as a result of the boom in population. Pocono Mountain School District will, for the third consecutive year, shed teachers and school buildings. The district is rapidly shrinking. Yet, property taxes haven't decreased. An incalculable number of foreclosures can be blamed on those taxes.
On foreclosures, Shelley Ackerman wrote: "Things happen, people get sick, jobs get lost, lives get ruined and then everyone moves on. You walk away as the bad guy, dead beat, and the bank walks away clean. Life happens and the question is who cares any more."
Wealth Manager Lou Ingargiola of Dunmore said about the FDIC's "no press release" policy: "Unfortunately it's pretty much how things go. What has the government told us since the financial crisis? Basically, the banks are too big too fail."
There is suspicion the efforts by the FDIC to conceal the banks from embarrassment is part of a broader strategy. Ingargiola believes it is designed to avoid eroding recent gains on Wall Street.
"Bad press will, in turn, lead to more bad press, which will, in turn, lead to more investor confidence," said Ingargiola. "It doesn't take much for (a) stock market correction or crash."