You remember several months ago, CBS 60 minutes television magazine featured a lady whose house was been foreclosed at that time and it turned out that the document to attest to bank’s ownership was a forged document. From that magazine, we learned that she was not alone that the documents of ownership being held by these banks were bogus. So many mortgage lenders were engaging in illegal foreclosures. Most evidently “robo-signers” were attesting that banks had the required documentation to seize homes without checking to see whether they actually had the right to do so — and in many cases they did not, they even changed locks in occupied homes. Since the fed is not visibly doing any investigation on this and most states are too poor to engage in their own investigation, we cannot say how widespread this practice was or is.
Instead our govts are pushing for settlement with the bankers that would adsorb them of any wrongdoings and pay a penalty of $30 billion and assurance that they will behave themselves in the future just like the Citigroup corporate governance and priorities of 2011. It seems like the govt. is going easy on the banks, remember, they are too “Big to Fail and too Big to Care,” judging from that large bailout without serious strings attached and failure of govt to change our bankruptcy laws to make it easier for families to stay in their homes. It never happened. Those that support settlement with the banks claimed that resolving the mortgage palaver expediently is the recipe to getting the housing market back on its feet and that getting tough with the banks would undermine broader prospects for recovery. Economic 101, putting more houses in the market would depress the market not increase it.
When will the govt realize that what is go for the Main Street is indeed good for Wall Street? According to Nobel Laureate Paul Krugman, “[t]he big drag on the economy now is the overhang of household debt, largely created by the $5.6 trillion in mortgage debt that households took on during the bubble years. Serious mortgage relief could make a dent in that problem; a $30 billion settlement from the banks, even if it proved more effective than the government’s modification program, would not.
Robo-signing Mortgage Document for Banks, Part 3, Too Big to Fail, Too Big to Care
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