This is a rush transcript from "Special Report," February 9, 2012. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: We have reached a landmark settlement with the nation's largest banks that will speed relief to hardest hit homeowners and some of the most abusive practices of the mortgage industry. And begin to turn the page on an era of recklessness that has left so much damage in its wake.
BRUCE MARKS, NEIGHBORHOOD ASSISTANCE CORP.: They didn't tell us the real truth which is the principle reduction is only going to impact 10 percent of the mortgages in this country. So it's really creating false expectations out there and that's why people have a real cynicism when they hear these agreements.
(END VIDEO CLIP)
BRET BAIER, ANCHOR: A lot of negotiation but finally a deal with the five big banks. $25 billion settlement. The Obama administration and 49 states not Oklahoma to clean up this foreclosure scandal, including robo-signing foreclosures.
Take a look at the specifics here. Forty-nine of 50 states are signing on again. Not Oklahoma. Includes Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally. And officials are saying it could help up to one million struggling homeowners.
Now here's the breakdown. $17 billion to reduce mortgage principal for a lot of them. Cuts $20,000 or so to help avoid foreclosure especially for those who are under water, in other words they're home is worth less than their mortgage. $3 billion to lower interest rates for thousands more here. And $5 billion will go to pay small settlements to families who lost their homes in foreclosure and possibly without due process.
This is a big deal when it comes to mortgages. It does not as you heard include Fannie Mae and Freddie Mac.
We're back with the panel.
Charles, your thoughts on this?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The settlement amount is large. But there is substance in politics here. On the substance, it's fairly narrowly tailored so that it doesn't completely protect the banks from liability. It's narrowly tailored to address robo-signings. And mortgage service abuses. It doesn't touch the slicing and the dicing of the original mortgages which is sort of at the root of the whole problem originally.
And it's also narrowly tailored as we heard. It only touches one in 10 of people holding mortgages. But on the politics of it, I think for Obama it's a feather in his cap. It's a big number. It sounds like a big number. In proportion to the problem it's small. But it's still a lot of money. And of course, it's the best, it's the ideal for politician. It's people getting money but through the coercion if you like of private industry. The banks. Rather than out of the treasury.
So it doesn't add on to the debt. It doesn't add on to the deficit. And people end up with some of the money in their pocket. So I think for him, it's a big day and it's a big win.
BAIER: Mary Katharine?
MARY KATHARINE HAM, DAILY CALLER: Well, forgive me if I'm a little skeptical about how this is actually gonna play out. I think Charles is right. Politically it's a good look for Obama. Something is happening even if it's just on margins with something that the people are very worried about. It reminds me of the BMG Columbia music settlement when we all are tricked into buying 10 CDs for a $1 and then they charged us with all the shipping and handling. Six years later you got a certificate for 12 bucks that you could spend on a CD.
I think in these large settlements you get those diminishing returns and the actual people hurt and the people who really did endure misuse of power by the banks will probably not get a lot of help here. And the same goes with the tobacco settlement. When you saw the federal government, state governments and the large entities get together in the tobacco settlement, you saw that those were people who benefited and not so much the people who actually sick from tobacco.
BAIER: Juan?
JUAN WILLIAMS, THEHILL.COM: Well, I think that the key, to my mind is, this money comes from the big lenders, from the Bank of America, Citi, that -- those -- that group. Not out of the federal government. So it's not --
BAIER: And many of them took federal money in the tarp bailout.
WILLIAMS: Correct. And so I think that's very responsible. And I think that plays into the political sentiment which is that nobody wants federal money used here. But the critical issue is that if you are looking at the overall American economy, trying to get that economy back on track. The housing market has been a problem. And the Obama administration's performance here has not been great. To put it lightly.
And so what you're getting now is they're coming to the party. They say there is more to come yet in terms of dealing with Fannie and Freddie and those who have bundled these into investment security instruments, these mortgages. That's yet to be done. They are also trying to get more out of Congress in terms of help for something that the president I think calls very worth noting responsible homeowners.
So as to delineate them from people who the American public would feel they should haven't been given mortgages in the first place. And it was just rampant abuse by the lenders and the government to be offering these kinds of mortgages to people who can't afford them.
BAIER: Mary Katharine
HAM: The Obama administration, though, has been at the party for a while. TARP, HARP, HAMP, sorry for all the --
BAIER: Yes.
HAM: But that's what they're called. The massive re-fi he suggested in the State of the Union which has no sign of passing or sign of being different than HARP or HAMP. And Dodd-Frank which ignored Fannie and Freddie. So he's had chances to deal with this and this feels like another tinkering on the edges.
WILLIAMS: One last thing is that the banks will now have some certainty about how much they have to repay. It may not be what everybody wants. But now they know and they can -- and now put some of that money back into the home origination of mortgages. And that's good for the economy.
KRAUTHAMMER: Like TARP and HAMP and HEMP, and all these programs --
BAIER: I don't think there was a HEMP. I'm not sure. I mean --
(CROSSTALK)
KRAUTHAMMER: Ron Paul issued, I think HEMP. The idea is the president has to give the appearance of action in motion. We saw it in the State of the Union address. There's nothing large he's proposing. You know when we have this huge overhanging debt. And it's the appearance of motion which is what a president wants who doesn't have any idea of what to do that's big.
BAIER: That is it for the panel. But stay tuned to see one interesting project from the White House science fair.
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