Obama administration earns bi-partisan scorn for forthcoming foreclosure settlement with banks

In the run up to a forthcoming settlement with major banks over alleged foreclosure abuses, the Obama administration is attracting criticism from Republican and even some Democratic officials who say the agreement won’t do enough to penalize the financial industry for its wrongs, the Wall Street Journal reported.

Lobbyist groups such as MoveOn.org protested outside a Chicago hotel yesterday, where Housing and Urban Development Secretary Shaun Donovan and Associate U.S. Attorney General Thomas Perrelli were meeting with Democratic attorneys general to review the terms of the settlement, the Journal said.

And some Democratic lawmakers have sympathy for the organization’s views.

“When it comes time to pay the penalty for fraudulent foreclosures, Wall Street banks again are trying to pass the buck,” said Democratic Sen. Sherrod Brown. “Instead of thorough investigations… instead of criminal prosecutions, we’re talking about not much more than a slap on the wrist.”

Donovan said the settlement would be good news for approximately a million U.S. households, reducing the amount they owe in home loans. [WSJ]