Law Offices of Kramer & Kaslow -- Noted Litigator Philip Kramer Weighs in on Recently Announced Banking Industry Settlement

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Kramer-Kaslow: New settlement between banking industry and government will hopefully leave homeowners with better service

Kramer & Kaslow

According to consolidated plaintive litigation attorney Philip Kramer, the recently announced settlement between the banking industry and the government, may just turn out to be better for homeowners, as long as the bank is not let off the hook. The settlement, as reported by the LA Times (,0,2152407.story), is part of the consent orders issued by the U.S. Department of the Treasury, Comptroller of the Currency, was announced earlier this month with the nation’s twenty largest lenders.

"Not everyone is happy," says Philip Kramer. "The bank regulators have been criticized for failing to stop unsafe lending during the housing boom and for pre-empting state attempts to rein in predatory lending. The settlement drew immediate criticism from consumer advocates and members of Congress who said the new measures didn't go far enough."

According to the LA Times article, "These consent orders are worse than doing nothing," said Alys Cohen, staff attorney for the National Consumer Law Center. "They set the bar so low on some things and they give the banks carte blanche on others. And they give the appearance of doing something while giving banks control of the process."

Philip Kramer, an attorney who has led a series of consolidated plaintive litigation lawsuits alleging many of these practices – and more – agrees that the settlement doesn’t go far enough. “For me, the biggest problem with the settlement is that it continues the financial sector practice of letting the industry police itself,” says Kramer. “And the remedies suggested are simply inadequate.”

According to the La Times Article, the consent orders allow for the following:

  • The banks will designate a single person for distressed borrowers to contact so they aren't bounced around from one call center employee to another.
  • The banks will put the foreclosure process on hold if a mortgage has been approved for a trial modification.
  • The banks will establish "robust" controls and oversight for the actions of law firms and others hired to help with foreclosures.
  • The banks will hire outside auditors approved by the regulators to review foreclosure proceedings in 2009 and 2010 and identify improper foreclosures, violations of state and federal law, and errors, misrepresentations or negligence that caused financial harm to borrowers.
  • The banks will compensate borrowers found to have been harmed financially by bank wrongdoing or negligence, including setting up a process for aggrieved borrowers to make claims for remediation.

This language allows the bank to develop programs and policies. “Imagine, if you or I committed a series of crimes and then proposed that we would come up with our own restitution program,” says Kramer. “No criminal charges. No jail time. Fines? We’ll figure it out later. That’s exactly what happened here. Is it an improvement over what existed before? Yes. Is it adequate? No, definitely not.”

The LA Times article says that according to the consent orders, the 14 largest mortgage servicers agreed to address the problems without admitting or denying wrongdoing. The orders also say that fines will be levied later, according to the Federal Reserve, which oversees the parent companies of 10 of the servicers, including Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc.

Philip Kramer hopes that this will be the beginning of real justice rather than a final resolution. “The problem is so big,” says Philip Kramer. “You have banks creating faulty loans, loans they knew would blow up and leave homeowners and investors in a lot of trouble. They aggressively sold these loans. They bought insurance, knowing the loans were faulty, and then profited again when the loans failed. Imagine if you were a car dealer and you got a shipment of cars with bad brakes. You knew the brakes were bad, and yet you aggressively sell those cars, and then you take out insurance policies on the drivers who bought those cars so that when they get killed you get even more money. That’s what happened here. The banks need much more significant penalties.”

PHILIP A. KRAMER is the senior partner of the Law Office of Kramer & Kaslow, in Calabasas, California. Kramer & Kaslow is Martindale Hubbell “AV” rated. Mr. Kramer is a perennial recipient of the prestigious “Southern California Super Lawyer” award.

Mr. Kramer received his undergraduate degree from Ohio State University and his Juris Doctorate from the Catholic University of America, in Washington, DC. His practice emphasizes commercial litigation and trial advocacy, with a concentration on business litigation, and real property matters. He has prosecuted and defended cases for over twenty five years.

Mr. Kramer is a licensed real estate broker and has spent considerable time providing legal services in connection with real estate issues relating to loan modification and loss mitigation, land use and zoning, environmental issues, easements, construction and development, finance, and landlord tenant matters.

Mr. Kramer is admitted to practice before all courts in the State of California, the United States Supreme Court and the United States Court of Military Appeals. Mr. Kramer has tried in excess of 200 cases. He has appeared on nationally televised programs regarding pre-trial procedure and trial strategy and has appeared as a guest lecturer on topics ranging from constitutional law to trial practice, and Mr. Kramer frequently lectures on a broad spectrum of various legal and business issues.

Mr. Kramer also serves as a Judge Pro Tem for the Los Angeles Superior Court and as a Mediator.

Mr. Kramer is also a past president of the Los Angeles West Inns of Court, a national organization dedicated to bringing professionalism and civility back into the legal profession. He also serves on numerous Boards of Directors and serves as an officer in many companies. For more information call (818) 224-3900 or visit


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Stuart R. Simone, Esquire
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