According to a press release issued recently by the office of Martha Coakley, the Attorney General for Massachusetts, Royal Bank of Scotland will pay $52 million to the Commonwealth for its part in bringing the global economic crisis to the doorsteps of homeowners. Specifically, the pursuit of RBS was on the basis that it “financed, purchased, and securitized residential loans that were presumptively unfair.” The release goes on to say that “AG Coakley’s office has been a national leader in holding banks and investment giants accountable for their roles in the economic crisis.”
Just what were the features of these loans that made them “unfair?” Introductory periods and “teaser” rates that Coakley found objectionable, as well as liberal debt-to-income ratios and substantial pre-payment penalties.
Sorry, no sale. Those "teaser" rates, prepayment penalties, and other features Coakley characterizes as "unfair," while gimmicky, for sure, were nevertheless fully disclosed to borrowers who were thinking about little else besides, "more, more, more," despite what the grandstanding regulators want you to believe. As for the aforementioned “roles” of banks like RBS in the economic crisis…just what were they? Making funds available to aggressive borrowers on the basis of asinine Fannie and Freddie underwriting standards?
While the issues are by no means uncomplicated here and there is plenty of blame to go around, as I have said previously and will say again, seeing banks like RBS strong-armed into coughing up millions upon millions while the government's social engineers, who had a very large hand in precipitating this calamity, are allowed to somehow change position in the relative blink of an eye and now reconfigure themselves as advocates for the economic well-being of the citizenry, is a travesty.