As I’ve argued in a series of blogs here and elsewhere, the banks have no legal standing to foreclose.
They ran all the mortgages through MERS (the private Mortgage Electronic Registry System), which destroyed the clear chain of title required to foreclose.
There is now no legal way for them to foreclose. And yet they continue to steal homes and throw the owners out on the streets. The AGs of all 50 states are suing them.
So here is the brilliant “compromise” they are offering up. The banks propose that they will provide $5 billion to settle claims by federal and state officials of improper mortgage-servicing practices. To be clear, the particular case at hand concerns only the more obvious ways that the banks have defrauded homeowners—purposely losing payments so they could tack on late fees, crediting payments to the wrong accounts so they could claim delinquency, and creating false documents through “robo-signing”.
They want to pay a mere $5 billion in compensation for stealing homes and destroying lives. The funds would be used to reduce loan balances for a few borrowers, and would pay a few months rent for homeowners who had been illegally thrown out onto the street. Oh, and they promise to change some of their more fraudulent practices. So far as I can tell, they plan to continue to engage in home theft on a gargantuan scale.
Here’s a better idea. Stop the foreclosure fraud. Make them prove they’ve got the documents to show a clear chain of title from mortgage origination through to today. If they do not, homeowners should be handed a clean title. The banks can still pursue delinquent borrowers for the payments—but banks should not be allowed to kick them out of their homes.
And in the “only in Washington” category, Representative Howard P. “Buck” McKeon wants the CBO to determine and make public the total amount of accrued interest the U.S. has paid China over the last five years on federal debt and then to assess the national security risks involved. That is definitive proof the beltway has taken leave of all its senses.
Here’s a better idea. Buck McKeon ought to have the CBO determine and make public the total amount of cheap consumer products Americans have bought from Walmart and other retailers with Chinese content.
Look, if Congress does not want Chinese to accumulate keystroke balance sheet entries at the Fed, we’ve got to stop buying their exports. Let’s erect trade barriers. Keep out the foreign goods and services. Don’t let any foreigners earn dollars. Yes, we tried that during the Great Depression, and everyone else retaliated. If we keep out imports, be prepared to lose the export markets. Close the borders and we’ll become self-sufficient. Rather than having the Chinese working hard at low wages, we’ll have Americans working hard to replace the lost output. I’m not sure it is a good economic strategy but at least we won’t have to conduct that stupid national security assessment.
How hard can this be to understand? Accumulation of dollars abroad is simply the “accounting record” of our current account deficit—the sum of our trade deficit plus the dollars we send abroad in factor payments. If you want the dollars to stay home, stop sending them abroad.
L. Randall Wray is a Professor of Economics, University of Missouri—Kansas City. A student of Hyman Minsky, his research focuses on monetary and fiscal policy as well as unemployment and job creation. He writes a weekly column for Benzinga every Tuesday. He also blogs at New Economic Perspectives, and is a BrainTruster at New Deal 2.0. He is a senior scholar at the Levy Economics Institute, and has been a visiting professor at the University of Rome (La Sapienza), UNAM (Mexico City), University of Paris (South), and the University of Bologna (Italy).