Several of the nation’s attorneys general have been working on forging a settlement with the nation’s biggest banks over the banks’ role in the foreclosure fraud scandal that broke a few months ago. The banks were found to have systematically violated due process when approving foreclosures, including employing “robo-signers” to sign off on thousands of foreclosures per day.

The leaders of the settlement talks have proposed having the banks pay up to $20 billion for their mortgage misdeeds, with the money going toward reducing mortgage loan principal for troubled homeowners. (Reducing principal is the most sustainable form of loan modification.) However, several Republican attorneys general have balked, siding with the banks, which have lobbied against having principal reductions be part of the settlement deal.

Virginia Attorney General Ken Cucinelli (R), for instance, said principal reductions are akin to “welfare.” So far, eight Republican attorneys general have publicly opposed including principal reductions in the settlement deal. But Georgia Attorney General Sam Olens (R) said yesterday that up to 20 attorneys general may take the banks’ side in this negotiation:

[Olens] estimated that as many as 20 of his colleagues are opponents. “While one AG may want to use it for principal writedowns, other AGs may use it for different methodologies to assist their constituents,” Olens said yesterday at meeting of state top legal officers in Chicago. [...] At least eight attorneys general, including Olens, Texas Attorney General Greg Abbott and Florida’s Pam Bondi, have publicly opposed principal writedowns as part of any deal.

A report from the International Monetary Fund showed that the effect of more aggressive loan reductions on bank balance sheets “is likely to be limited,” and several of the banks involved in the settlement discussions are back to making sky-high profits. But instead of pushing to aid homeowners who were pushed into housing distress through no fault of their own, Republican AG’s are taking their cues from the banks. Olens, in his last election campaign, received $195,000 from the financial services industry, making it his second largest contributor.

The Senate failed to move forward on a bill funding the Economic Development Administration (EDA) yesterday, voting against cloture 49 to 51. Created in 1965, the EDA exists “to generate jobs, help retain existing jobs, and stimulate industrial and commercial growth in economically distressed areas of the United States.” Every single Republican voted against cloture, spurring Senate Majority Leader Harry Reid (D-NV) to lambast Republicans this morning for caring “more about partisan politics than putting people back to work.” The “jobs deficit” is “just as critical as our budget deficit,” he said.

Sen. Bob Corker (R-TN), however, scoffed at the idea that the EDA bill even came close to the importance of the budget deficit “calamity” on the Senate floor today. Corker implored senators to reveal a deficit reduction plan rather than waste time on the EDA reauthorization bill, which, to Corker, was simply political “filler” that amounted to “doing almost nothing of importance for this country”:

CORKER: I implore the folks that are meeting behind closed doors — I implore them to come forward and to outline the goals they’re trying to achieve and when they think they’re going to achieve it so that all of us that are sitting around here cooling our heels — doing nothing — doing almost nothing of importance for this country. I mean, the senator of Illinois talked about the EDA bill, we all knew it wasn’t going to pass. Everybody knew that.

Everybody knew that that bill was offered on the floor to kill time — to make it look like the United States Senate was doing something. That’s all it was for. Everybody knew that, everybody working up front knew that, the pages knew that. Everybody knew that. So for people to come down here and act like it’s a shock that cloture wasn’t achieved on EDA when we knew it was just here for filler is kind of surprising. We knew what it was about.

Watch it:

But two years ago, Corker was only too pleased to “kill time” praising the EDA’s work. In 2009, Corker and Tennessee colleague Sen. Lamar Alexander (R) celebrated an infrastructure grant from the EDA for their home state. Corker called the grant a great way to “protect jobs, and support economic growth in the region. In the midst of an economic crisis, projects like these are just the kinds of things that will renew confidence and reinvigorate private investment in the area.” Accurate praise, given that EDA investments has created about 1,000 jobs for Tennesseans in the last year alone. Since January of 2011, the EDA grants will create or save more than 4,700 jobs across the country.

Perhaps Corker should pass the time considering why the EDA’s job creation is worthy of praise in 2009 but is not worthy of the GOP’s supposed “jobs agenda” in 2011. Given that jobs are still Americans’ top priority, it’s hard to see how Corker and the Senate GOP’s dismissal of a jobs bill is anything but a miscarriage of responsibility and a general waste of time.

House Republicans — as they have long threatened to do — have been advancing appropriations bills that undermine the Dodd-Frank financial reform law by not providing enough funding to the regulators charged with implementing it. The GOP has sought to cut the budgets of both the Securities and Exchange Commission and the Commodity Futures Trading Commission, two agencies that were already swamped with policing financial markets that have exploded in recent years.

These budget cuts will have a detrimental effect on the economy, as the agencies charged with reining in Wall Street excess will be unable to do so, allowing the nation’s biggest banks to go back to business as usual. But according to Senate Minority Leader Mitch McConnell (R-KY), House Republicans are on the right track. Today, McConnell explained that, in his view, “any move to slow down the agencies’ ability to implement rules stemming from the Dodd-Frank law is good for the country“:

“Anything we can do to slow down, deter or impede their ability to engage in this kind of oppressive overregulation which is freezing up our economy would be good for the country,” McConnell said, speaking at a breakfast hosted by the Christian Science Monitor…McConnell endorsed those plans, saying, “The less we fund those agencies, the better America will be.”

As we’ve noted, Wall Street has actually spent as much to undermine Dodd-Frank this year as it spent trying to shape the bill at the height of the financial reform debate. And Senate Republicans have been happy to play along, refusing to confirm any nominee to head the new Consumer Financial Protection Agency and hijacking unrelated bills with amendments meant to gut Dodd-Frank.

McConnell’s pronouncement shows that — despite the depths of the 2008 financial crisis, from which the country is still struggling to recover — the GOP is entirely uninterested in ensuring that there are cops on the beat watching out for Wall Street shenanigans. In fact, taken literally, McConnell thinks the country is at its best when the country’s titans of finance can operate entirely without oversight. Overall, U.S. households lost about $16.4 trillion in wealth due to the financial crisis, barely half of which has been recouped.

Appearing on Fox News host Neil Cavuto’s show yesterday to push his debt ceiling contingency plan, Sen. Ron Johnson (R-WI) seemed to welcome the possibility of deploying it, despite the fact that experts say not raising the debt limit could have disastrous consequences for the U.S. and global economies. Johnson dismissed the threat that rating agencies would lower their assessments of American debt if Congress fails to act, saying there’s a “real possibility” that the limit won’t be raised:

JOHNSON: I’m going to do everything I possibly can to make sure we don’t increase the debt ceiling until we actually fix the problem. So, that’s what I’ve been trying to work on is to say, we don’t have to fear not increasing the debt ceiling. It’s been irresponsible of this administration to not lay in the contingency plan in case we don’t increase that debt ceiling, because that’s a real possibility.

Watch it:

Johnson’s acknowledgement that the GOP may shoot the hostage is fairly startling, considering that Senate Majority Leader Mitch McConnell (R-KY), House Speaker John Boehner (R-OH), and other GOP leaders have all publicly insisted that the debt limit must be raised.

Johnson’s doomsday plan would prioritize interest payments on the debt and limit government spending to tax revenue coming in. The result is a massive cut to outlays literally overnight that would force the government to default on its obligations to federal workers, Social Security recipients, and others. Johnson and others on the right, including House Budget Committee Chairman Paul Ryan (R-WI), have dismissed the significance of a short-term default like this. But earlier this month, the credit rating agency Fitch warned that even some missed payments — exactly what Johnson’s plan calls for — would do real damage to the U.S. creditworthiness.

Back in May, Republican presidential hopeful Tim Pawlenty endorsed attaching a constitutional balanced budget amendment to any increase in the federal debt ceiling. The debt ceiling needs to be raised by Aug. 2 to avoid the myriad negative consequences that would occur if the U.S. winds up defaulting on some of its obligations.

The Manchester Union Leader notes yesterday that another 2012 GOP contender, former Utah Gov. and ambassador to China Jon Huntsman, “has yet to formulate a comprehensive economic policy.” However, one item Huntsman ardently supports is a balanced budget amendment. During an interview with CNN, he said he would like the ongoing debt ceiling negotiations to at least “begin a very important discussion” about implementing such an amendment:

I think short term, we have the debt ceiling issue, and I believe those negotiations are going to play out right to the final hour, and I suspect we’re going to get some real cuts in exchange for meeting the needs under the debt ceiling, and probably begin a very important discussion in this country as it relates to a balanced budget amendment, which is exactly where we need to be longer term. So if you got commensurate cuts and if you got a start in terms of a discussion about the balanced budget amendment, something every governor has to deal with — that’s the most important safeguard for governors, you present a budget that’s in balance, you have to, that’s a requirement by law — I think that would be a pretty good outcome.

Watch it:

While he has gained a reputation as a moderate, on economic issues Huntsman is a true-blooded conservative, supporting disastrous ideas like a flat income tax. His support for having a cockamamie constitutional amendment be part of the debt ceiling discussion is right in that vein.

Not only would a balanced budget amendment take forever to pass — rendering it totally useless for the current budget debate — it would be incredibly destructive by preventing the government from running a deficit when the situation calls for it (such as now, as the country tries to recover from a financial crisis). “The amendment’s requirement that the federal government annually spend no more than it collects is, quite simply, insane. Debt in itself is not harmful, neither for governments nor for households,” wrote Scott Galupo, a former staffer for Speaker of the House John Boehner (R-OH).

Bruce Bartlett, a former economic official in the Reagan and George H.W. Bush administrations, laid out why such an amendment makes no sense (including that it would make recessions worse and be completely unenforceable) before concluding that proposing one is just a “ploy by Republicans to avoid explaining how spending should be cut or taxes raised to actually achieve budget balance.” And by trying to insert such an unrealistic idea into the debt ceiling debate, Hunstman proves how unserious he is about the undeniable need for the ceiling to go up.