So I’m listening to Andrea Mitchell and Jim Cramer explain the Foreclosure Fraud Crisis as they wail and rend their garments about how terrible it will be for just everyone if these poor banks are held responsible for this problem because the whole economy will implode.
That’s nonsense. People should go to directly jail at this point, do not pass go. The real estate market is still officially fucked and while everyone wants it to “find its bottom” coddling the big financial institutions and their crooked subsidiaries and contractors has not worked all that well for average Americans at any point in this ongoing crisis (or for Democrats for that matter.) The only people who are benefiting from the capitulation to the Big Money Boyz’s threats and hoary predictions on this one are the Big Money Boyz and the GOP. The economy still sucks and will continue to suck until the incentives for this criminal behavior and self-destructive malfeasance are stopped.
I keep waiting for someone, anyone to bring up the issue of taking personal responsibility for destroying the lives of millions of innocent people. Republicans love to talk about responsibility when it comes to welfare queens, or public service unions, or just about anybody other than the greedy, manipulative motherfuckers who control the financial institutions and brokerage houses. As we know, people like Megan McArdle are quick to blame (poor) individuals for their bad actions, but loath to condemn rich-ass corporations: “But financial meltdowns don’t offer villains, for the simple reason that no one person or even one group is powerful enough to take down a whole system.” As Barry Ritholtz responds:
Um, Megan, I am going to have to beg to differ with you. There were many, many identifiable villains who through their own action and inaction, helped create the crisis. There were people who remained slavishly devoted to an outmoded and disproven ideology, which led them to decisions that were indefendable. Some people engaged in utter recklessness when it came to risk management, or such gross irresponsibility that they are not merely morally culpable, but legally also. Then there are those regulators who gave the corporate interests they supervised pretty much everything they asked for. And of course, the people simply trying to grab a free lunch contributed mightily to the collapse.
I have 322 well researched pages that shows as much.
Goldman Sachs was but one of the 5 biggest investment banks that requested from the SEC, and received, an exemption from the net cap rules. This allowed their leverage to balloon from 12-to-1 to as much as 40-to-1.
As a nation, we need to stop pretending this is “too complicated” and start holding the responsible parties accountable . . .
Why is this such a hard concept to grasp? Where are the morality tales told by conservatives about evil bankers, like the ones they tell about overpaid bus drivers, or Presidents who stick cigars where they shouldn’t, or lazy unemployed bums who won’t get off their asses to look for work because of the bi-monthly unemployment checks that the government keeps extending, or welfare cheats with big-screen TVs and Lotto habits? Why can’t they be bothered to condemn immoral, illegal activity when it’s done by the captains of industry and the masters of the universe?
Then I see articles like this:
“The first thing that needs to happen, I think, is to get these people out of their homes,” a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said recently. “Correct! I’ll explain,” the veteran member of a bank restructuring and advisory team said.
Amid evidence of sham documents and widespread paperwork gaffes, if not systemic fraud that increasingly looks like it may be terrifically deep, Bank of America recently halted all foreclosure proceedings around the country. That followed similar announcements from the home-loan giants JPMorgan Chase and GMAC.
But Wall Street does not sympathize. “You had people putting zero down to get massive houses they couldn’t afford to be in,” he said Monday morning, “but now they want to stay. And the government wants to let them stay, because they’re voters.” A few hours later, the Goldman Sachs arm Litton Loan Servicing said it had suspended certain foreclosure proceedings, too. “Talk about a financial scandal,” a Wall Street Journal editorial this weekend joked. “A consumer borrows money to buy a house, doesn’t make the mortgage payments and then loses the house in foreclosure—only to learn that the wrong guy at the bank signed the foreclosure paperwork. Can you imagine?”
“The problem is they don’t deserve to be in that place. They probably deserve to be there less than they used to,” the source continued, referring to incomes lower now than they’d been when the loans were made in the first place. “You do need to foreclose, and you need to go back to people living in houses that are consistent with their income levels.”
Or like this:
But some fear that it may be difficult to do any foreclosures for a while. The risk is that foreclosure flaws are so widespread, or the political furor so heated, that the entire process grinds to a halt, as Citigroup analyst Joshua Levin said in a conference call this week.
In some cases, that would choke off much of the cash flow used to pay mortgage bondholders.
In other words, the only people to blame are the ones who were sold a bill of goods, and who were told that their ridiculous mortgages would not be a problem because home prices always go up – they made bad choices, so they need to be held responsible.
Also, not being able to kick people out of their homes quickly enough, even if they’re being kicked out through fraudulent means, is a bad thing, because certain investors may suffer as a result.
DOES ANYONE GIVE A FUCK ABOUT THE PEOPLE WHO GOT SCREWED OVER BY FUCKING RAPACIOUS GREEDY ASSHOLES AND WHO ARE GETTING FRAUDULENTLY KICKED OUT OF THEIR HOMES?
While I calm down, back to Digby:
As I wrote yesterday, these banks are once again holding the country hostage with their threats that if anything should be done about their criminality they’ll blow up the whole damned place. Well, they already are —- in slow motion. If we want to find a “bottom” to this market, they need to institute a serious cram-down program to help real people work out these messed up mortgages instead of allowing the banks fix their balance sheets through fraud and the market to stabilize by throwing people into the streets. It’s not working.
And everybody needs to stop worrying about the moral hazard of letting average people off the hook for their mortgages and worry a little bit more about the moral hazard of continually allowing these huge financial institutions to get away with murder.
UPDATE: I got so pissed off reading that article above, especially the glib Hermes-tie-wearing guy saying that people didn’t “deserve” to be in their overpriced homes any more, since their incomes were lower than before, that I forget to mention something: how exactly did those incomes get lowered, anyway? How did all those people paying for all those height-of-the-market mortgages suddenly become unemployed, and unable to pay those mortgages? What happened, exactly, to send this country’s economy into a tailspin that it still hasn’t recovered from? Could it have something to do with economic policies that favored greed over the common good? That loosened regulations to the point that they were basically non-existent? That created the largest gap between rich and poor in this country’s history? Nah. Shorter Hermes-tie-wearing guy, and shorter the rest of the masters of the universe: Everyone’s fault but mine.
UPDATE #2: One more excerpt form the New York Observer article, which is noted without comment:
ON TUESDAY, CITIGROUP announced it would stop providing foreclosure work to the huge Florida law firm run by David J. Stern, which the state attorney general has been investigating. In addition to a deposition from an ex-employee who described rampant fraud, Mr. Stern himself has been accused of sexual harassment, and is the target of a class-action case accusing him of racketeering. He is said to have a jet-propelled yacht called Misunderstood.