Robo-Signing Deal Complete

After nearly 2 years of the "Robo-Signing" scandal, the deal was completed today, in an election year and that has my mind thinking about the possibilities, especially considering billions of the proceeds are to help struggling homeowners, which will amount to a hill of beans when all is said and done over a 3 year period, but it sure looks like a victory for Obama any way you look at it. The banks are essentially footing the bill for housing aid and 3/4 of a million people foreclosed on will get a check for $2,000 (that's buying votes 3rd world style) ; it makes Obama look like he was tough on the banks in a period of American history which has seen probably the biggest backlash against financial institutions via the Occupy movement. For the banks, it amounts to a slap on the wrist-$26 billion between the 5 big banks, JPM, C, BAC, WFS, and Ally Financial, which lets not forget is GMAC financing, which got more then a little help from the government.


Was it a good deal for the banks? Rick Santelli pointed out, the banks are paying for this settlement using cash proceeds from previous bank bailouts which have not yet been paid out. The $26 billion dollar deal amounts to $2,000 for every person foreclosed on, which is probably about as much as the banks spent in legal fees per foreclosure. Some bank bulls/supporters such as Dick Bove, called this, "The mortgage deal from hell. There is no sanctity of contracts in the United States. Only fools meet their financial commitments. The non-payers are the truly enlightened." He also pointed out the inequality of the deal, more or less one person who made extra principle payments or put down a bigger down payment, won't get the benefit of the principal write down that those who have an upside down home, which may be because they stopped making payments, they put down a minimal amount, etc,  will.


 Initially the major money center banks were green and up more then they closed, several closed red. Buy the rumor, sell the news? 


BAC had a 2.6% intraday gain, closing at a +.62% gain, ALLY didn't give up much and closed at +.43 on a doji star and extreme volume. WFC didn't give up much, closing down at -.16% (a big deal these days). C was at nearly a +1.4% gain and closed down at -1.64% on a Dark Cloud Cover candle, the first since April 15, 2010. JPM also lost a bit from nearly a 1% gain on the day to a close of -1.12 and also putting in a bearish candlestick pair, a Bearish Engulfing pattern, the first since December 6, 2010.

 C on a bearish "Dark Cloud Cover" candlestick pair.

JPM with a bearish "Engulfing" pattern that swallowed the last 4 days of buyers.


Any way you dice it up, you saw what Financials broadly looked like in the last post so maybe this was a buy the rumor sell the news event.