ForeclosureGate continues to refuse to go away despite the best efforts of the bankers and their shills in the business cable universe. The deadbeat-borrowers-who-just-want-free-rent meme is wearing awfully thin under the pressure of reality as evidenced in last week’s hearings on the topic on Capitol Hill. No doubt the impact of hundreds of thousands of cases of foreclosure abuse as the banks and servicers continue to defraud the nation’s middle and not-so-middle classes of their earnings is filtering upward even into the parallel universe of our legislative branch.
Nonetheless, the assembled solons at last week's Senate hearings expressed an eerie detachment from the ongoing looting and its fundamental causes. The oddest exchange arose from one senator, Johanns of Nebraska, who, upon hearing that people with loan modifications are being railroaded into perjury-laden bank proceedings, repeatedly moaned, ‘That’s not right’, like an earnest Midwestern Sunday School teacher before a classroom of sixth-grade farm girls. Johann’s exchange is at 1:02 of the hearing linked above on C-SPAN’s video library (a great resource BTW—imagine what fun I.F. Stone would have had with it).
Johann and other senators, like Utah fossil Robert Bennett (ousted by Tea Partiers who decided he’s a dangerous liberal), were shocked, shocked, to discover that banks put their short-term profit-gouging before fairness to customers or even to preserving their ‘brand’. Bennett marveled that no smart owner would do that because it will undermine their client base and ruin their business in the long run.
Really? These deluded seniors apparently think we’re still living in 1950s America where good old Jerry is the bank officer handing out mortgages, and he’ll look after things to make sure they’re all right.
The legal services lawyer, who inserted some uncomfortable case histories into the discussion, didn’t do her side much good with her Central Casting imitation of a shrill social worker, but a legal expert from Georgetown struck just the right note of relentless refuge in the facts, which can be summarized as follows:
-Mortgage delinquencies are mushrooming, and not all of them can be fixed since people have lost jobs and income. But a lot of them could be if it were not for the juicy fees that can still be stripped from the losers’ assets by mortgage servicing firms.
-While the banks and thug reporters in the business media furiously attempt to paint the whole situation as technical slip-ups that the penniless want to exploit to delay the inevitable, many, many supposed remods are going down because banks refuse to stop the simultaneous foreclosure process and systematically trick desperate families. (Senator Tester of Montana referred to the flood of complaints of this nature that his office is getting from a state with fewer than a million inhabitants.)
-Robo-signers and other abuses of the legal system are not rare accidents but are required since the banks and issuers of mortgage-backed bonds failed to follow explicitly detailed legal procedures in establishing the bond trusts. This was done to speed up the process and generate more and faster profits. Now, the bankers want the feds to come to their rescue once again as in 2008 arguing that they are essential to the nation’s fine economic recovery—the one we all continue to search for under rocks.
What is not revealed in the hearing is the nefarious role of Treasury outlined at length by Yves Smith at Naked Capitalism: that the Obama Administration is attempting to ignore the scandal because its number one and perhaps sole priority is pumping cash into the illiquid—or maybe insolvent—banking system. If a few poor slobs get crushed under the wheels, that’s a small price for the other guy to pay. Since that worked so well for Obama so far, we should just keep up the good work, is the apparent philosophy at Treasury where most of the architects of the situation can be assumed to be eagerly awaiting the chance to jump to lucrative banking jobs once Obama crashes out fully.
My contribution to the discussion of this ongoing collapse of the rule of law in the property courts is that it exactly parallels the other one initiated by Bush and sustained by Obama’s collusion and the hearty and full-throated support of the majority of the American people. I refer to the destroying of habeas corpus and the entire panoply of extra-judicial assassination, impunity for torture, obstruction of justice and wholesale spying. The latest round of testicle-grabbing by TSA is only the latest manifestation, and if someone does not revolt pretty soon, we will promptly get to see exactly what it means to hand over to the state the tools it needs to get its way under any and all circumstances.
Perhaps the 1.3 billion Chinese would like to give us some lessons on how that feels since they’ll soon be in charge anyway.