Geithner may try, but he cannot compel Attorneys General in both parties to settle for pennies on the dollar and relinquish all of their liability for consumer protection violations and fraud upon state courts. He cannot influence investors who see a giant meal ticket in the form of forcing big banks to repurchase faulty mortgage backed securities. If there was a magic bullet in this debacle, it would already have been fired.
Now that sounds interesting. We know that the banks have been furiously lobbying in Washington DC to cast off the liability for their former actions. The problem? These are state law issues and Washington DC has no jurisdiction – even though it would like to so it can accept their bribes, er, “campaign contributions” to make it all go away.
They’ve trotted out Kathryn Wylde, the President of the Partnership for New York City, to attack Eric Schneiderman for his intervention in the Bank of America settlement with investors over mortgage backed securities. Wylde is going to bat for BofA as well as the Bank of New York Mellon, the trustee for the MBS in the settlement. And she is actually arguing that Schneiderman, by defending the rights of investors and seeking the truth on out and out securitization fraud, is threatening the existence of the financial sector in New York City. No, really.
That’s nothing new. The old “tanks in the street” argument is repeatedly trotted out – “the economy will collapse if you don’t let us continue to loot!”
Of course the problem with such a premise is that there’s only so much blood in the vampire’s victims, and eventually it all gets sucked out. Then the victim undergoes circulatory collapse and the looting stops, like it or not.
We’re there folks.
But some of the AGs who believe in their job description are starting to catch up here. And try as the elites and oligarchs might to stop them, a tipping point is being reached where the public may understand just how much the mortgage industry wrecked the system of private property in this country.
That would be nice.
The true tipping point is reached when ordinary Americans – including those who are paying their mortgages – come to realize that their titles have been clouded as well, and may be no good at all. Oh sure, you may believe you got a release of your mortgage, but if the bank in question never had the conveyance in the first place they gave you a worthless piece of paper. The truly bad news, if it comes at all, will only come later – perhaps many years later.
Can this eventually be sorted out? Probably. But you’re going to pay for it if the AGs don’t do their job and force the institutions that screwed this up to fix it – at their expense. Despite common belief your title insurance is going to be cold comfort, if any at all, simply because title insurance companies are rather thinly-capitalized – they exist to deal with things like a fence that is 2′ over the property line, not a situation where the entire value of your home is owned by someone other than you. Any material number of those sorts of claims and they’re bust – all of them.
The proper thing for these AGs to do is to bring criminal charges – not just civil ones. After all, mass fraud isn’t a civil matter, especially when you’re dispossessing people of their homes without any evidence that you actually hold the paper in question, and to cover this up you perpetuate fraud upon the court by “robosigning” and “creating” documents that you cannot produce – never mind assessing fees that are questionable at best.