Crimeless Victims

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(WARNING: This another one of those posts where I defy liberal orthodoxy and cause people to think I have turned into a whip-kissing racist Republican. You have been warned.)

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Forbes:

Finding Little Evidence Of Foreclosure Fraud, Feds Give Up

Over at the Huffington Post they’re still talking about “rampant foreclosure fraud.” But I was always skeptical of claims banks were stealing houses from innocent homeowners. One big problem with that theory: Banks lose money on virtually every house they take back in foreclosure. And now the federal government seems to agree.

With a pair of terse notices yesterday, the Office of the Comptroller of the Currency basically admitted that its elaborate process for turning up evidence of fraud in hundreds of thousands of loan files was a waste of money.

[...]

The outcome shouldn’t come as a surprise. After I wrote a piece critical of the parallel mortgage settlement with state attorneys general last year, comparing it to the deeply flawed tobacco settlement, I was barraged with comments from critics accusing me of downplaying foreclosure fraud. I responded with one simple question: Has there been a single case in the past five years of a homeowner who was current on his mortgage being foreclosed through fraud?

Silence. I did get a lot of legal gobbledygook from marginally competent lawyers who, as it turns out, were the real crooks in the foreclosure crisis. For excessive fees, they offered underwater borrowers the false hope they could somehow keep their homes without paying for them, either by challenging the foreclosure paperwork or convincing a judge that the national registry system known as MERS was not the legitimate party to foreclose. Those tactics mostly failed. The Federal Trade Commission has a website devoted to protecting borrowers from the real scammers in the foreclosure crisis, and prosecutors have found plenty of fraud. Last September North Carolina AG Roy Cooper, for example, sued three foreclosure assistance firms for charging upfront fees and delivering nothing in return.

The reality is robosigning couldn’t have been the cause of foreclosure fraud because robots can’t engage in the self-interested behavior that underlies fraud. Robosigning was just an acknowledgement that in a large, modern lending institution only the central computer registry of mortgages contains all the information about loans, and no lawyer at the periphery can possibly possess additional information beyond what is in that registry.

[...]

Fraud is a flexible term, of course, and many lawyers think it includes lending money to people who have no hope of paying it back. This so-called “predatory lending” doesn’t make any economic sense, unless you’re willing to buy the theory that the fees flowing from an ultimately unprofitable loan were enough to induce bankers to destroy their own institutions in search of a year-end bonus. That’s possible, but it downplays the responsibility of the borrowers who signed detailed loan documents, filled with caveats and cooling-off periods mandated by federal regulators.

As for robosigning computers stealing homes, still not much evidence for that. If you know of a case, do let me know.

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I wrote a post or two about foreclosure fraud a while back. When the foreclosure crisis first started I was gullible enough to accept the claims of fraud at face value. But when I started to write about it something just didn’t add up.

According to the OWS crowd and some lefty bloggers, the foreclosure crisis was all a big scam wherein the Evil Big Banks conspired to steal peoples’ homes by getting the people to borrow money and then foreclosing on them. The only problem is that scheme does not make any sense.

The purpose of fraud is to make money. Fraud is a non-violent crime. The scam artist wants to convince the “marks” (that’s us) to part with our money and/or valuable property in exchange for something of little or no value. There are lots of variations, including everything from check forgery and credit card scams to pyramid schemes and full-fledged “stings”.

Now let’s look at a typical real estate transaction. You have a buyer, a seller and a lender. The seller is the grantor. They own the property and want to trade it for money. They will make money only if they receive more for the property than they originally paid. Up until recently it was commonplace for sellers of real estate to make huge profits (aka “capital gains”) from properties they held only a short time.

The buyer wants to acquire the property either to live in, as an investment, or both. They are willing to trade money in exchange for the property. Unfortunately, they don’t have enough money to make the seller happy.

This is where the lender comes in. The lender has money they want to invest in order to make more money. One way they do this is by loaning the money to other people with interest. The interest is their profit. They make money only if the loan AND the interest are paid. This may take 20 or 30 years to complete.

The lender agrees to give the buyer the money to pay the seller. The buyer agrees to repay the loan plus the interest. To protect the lender’s investment the buyer also agrees to give the lender a deed of trust securing the loan against the property. That way if the buyer fails to repay the loan the lender can sell the property to get their money back.

It is important to note that the lender does not really want the property. If they did they would have simply bought it themselves. They want the buyer to fulfill the loan agreement.

There are typically some other people involved such as realtors, inspectors, examiners and escrow agents. These people make their money off the transaction and once the sale is complete they are no longer involved. The seller walks away with the money and their part is finished as well. All that is left is the buyer and the lender. As long as the buyer keeps making the agreed upon payments everything is hunky-dory.

A default occurs when, for whatever reason, the buyer stops making the agreed upon payments. While this may not be the buyer’s fault it is definitely not the lender’s. It doesn’t matter why the buyer stopped making the agreed upon payments, it only matters that they stopped making them.

Before the lender can foreclose on a property there are lots of required hoops they have to jump through first, starting with an official notice to the buyer that they missed one or more of the agreed upon payments. I am not going to describe all those hoops because they vary from state to state and this post is getting too long already.

Normally when a property has been foreclosed upon it is sold at auction by a trustee. The proceeds of this sale are then used to satisfy the loan contract. The measure of damages for breach of contract is to put the lender in the same position they would have been in had the contract not been breached (including costs and fees).

If there is any money left over after the sale it is given to the buyer. If the sale does not cover the lender’s damages then they can pursue a deficiency judgment against the buyer. The lender cannot make an extra profit in a legitimate breach of contract action. Under the law the best case scenario is for lender to end up with the same amount of money either way. More than likely they will end up with less money after a foreclosure.

In order to make money though foreclosure fraud more than one party must be involved and the property in question must be worth substantially more than the value of the loan. The purpose of that kind of a fraud is to acquire the property for less than it is worth and then sell it at a profit and the scam takes place in relation to the trustee’s sale. But that won’t work if the property is worth less than what is owed. These days upside down mortgages are more common than the other kind.

Defenses to foreclosure like “show the note” and claims of robo-signing are legal technicalities rather than defenses on the merits. Mortgages are often bought, sold and traded between lenders. Sometimes Quite often they screw up the paperwork. But just because they screwed up the paperwork doesn’t mean you don’t owe the money.

Foreclosures and evictions are often traumatic because our homes are tied to our sense of identity. But it isn’t “yours” until you finish paying for it. If you don’t pay for it you gotta give it back. If somebody loans you money they aren’t being greedy when they expect you to pay it back.

Wall Street Occupies The White House

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Kevin D. Williamson:

Not far from Zuccotti Park, where Occupy Wall Street was fragrantly encamped, I noticed a young man wandering into a store to buy a pack of cigarettes on a bright Saturday morning, wearing blue jeans, a T-shirt, and a $237,000 Vacheron-Constantin watch. In a world of $600,000 cars (consult your local Maybach dealer) and $4,300-a-night whores (consult Eliot Spitzer), it’s no big deal to buy a president, which is precisely what Wall Street did in 2008 when, led by investment giant Goldman Sachs, it closed the deal on Barack Obama.

For a few measly millions, Wall Street not only bought itself a president, but got the start-up firm of B. H. Obama & Co. LLC to throw a cabinet into the deal, too — on remarkably generous terms. President Obama, for a guy prone to delivering prim and smug little homilies denouncing greed, greed, greed — the only of the seven deadly sins that truly offends Democrats (though Mrs. Obama has done some desultory work on gluttony) — is strangely comfortable among the Gordon Gekkos of this world. Shall we have a partial roll call? Beat the drum slowly and call out the names: With unemployment still topping 9 percent, the catastatic world economy teetering on the brink of another, even larger financial catastrophe, and trillion-dollar U.S. deficits as far as the green-shaded eye can see, let’s hear it for Obama’s first National Economic Council director, Lawrence Summers (of hedge-fund giant D. E. Shaw and venture-capital firm Andreessen Horowitz), who has had some nice paydays courtesy of Lehman Bros., JPMorgan Chase, and Citigroup. Let’s hear it for Citigroup’s Michael Froman, deputy assistant to the president and deputy national-security adviser for international economic affairs, for Hartford Financial’s Neal Wolin, deputy Treasury secretary, for JPMorgan’s William Daley, Obama’s chief of staff, and for his predecessor, Rahm Emanuel of Wasserstein Perella. Let’s hear it for Fannie Mae’s Tom Donilon, national-security adviser. (No, seriously: One of the luminous interstellar geniuses who brought Fannie Mae to its current aphotic state of affairs, upside down to the tune of trillions of dollars, is running national security, and the former director of the White House Military Office, Louis Caldera, was on the board of IndyMac when it finally went toes up — sleep tight, America!) And, lest we forget, let’s have three big, sloppy cheers for economic-transition team leaders Robert Rubin (Goldman Sachs, Citigroup) and folksy tax enthusiast/ghoulish billionaire vulture Warren Buffett.

That’s a pretty fantastic lineup, from Wall Street’s point of view, but the real bonus turned out to be Treasury secretary Tim Geithner, who came up through the ranks as part of the bipartisan Robert Rubin–Hank Paulson–Citigroup–Goldman Sachs cabal. Geithner, a government-and-academe man from way back, never really worked on Wall Street, though he once was offered a gig as CEO of Citigroup, which apparently thought he did an outstanding job as chairman of the New York Fed, where one of his main tasks was regulating Citigroup — until it collapsed into the yawning suckhole of its own cavernous ineptitude, at which point Geithner’s main job became shoveling tens of billions of federal dollars into Citigroup, in an ingeniously structured investment that allowed the government to buy a 27 percent share in the bank, for which it paid more than the entire market value of the bank. If you can’t figure out why you’d pay 100-plus percent of a bank’s value for 27 percent of it, then you just don’t understand high finance or high politics.

But high finance is not the only corporate mystery to be unraveled here: President Obama’s repetitious denunciations of Big Oil have not stopped his man David Axelrod’s firm from setting up Astroturf campaigns on behalf of Exelon subsidiary ComEd, or stopped the president from appointing GE chief executive/tax-minimization engineer/offshoring guru/bailout baby Jeff Immelt to his risible White House jobs commission, or choosing former Kraft and Duke Energy board member Mary Schapiro to run the SEC.

When President Obama opined during his 2011 State of the Union speech that a corporate tax-rate cut might be just the thing for America after a year of record corporate profits, his left-wing base was shocked and dismayed. Heck, some conservatives were caught offguard, too. Perhaps they hadn’t noticed who was running the Obama administration: In large part, the same guys who plan to be running the next Republican administration.

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If you believe that Wall Street has too much control over our government then you must believe that Barack Obama is Public Enemy Number One. If you really meant the things you say you would focus on him, mic check his speeches, occupy the White House, support a primary challenger, hound Obama into retirement.

Of course that would alienate your financial supporters (the ones who kicked in $500 thousand for smoked salmon and grilled veal at the Zuccotti All-You-Can-Eat Buffet). It would also piss off all those pro-Obama government employee unions that swell your ranks whenever you feel like wankmarching through lower Manhattan. The corporate media wouldn’t have been so nice to you either.

But that’s okay, next Spring you can boost your self-esteem by harassing Mitt Romney and the Republicans. Then next Fall you can hold your nose and vote for Obama.

But don’t expect me to be cheering for your victory.

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Bunker mentality

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Democrats Dare Not “Abandon” the White Working Class

It’s an enduring myth of modern American politics that the white working class is what stands between Democrats and a majority. Even before the character of Archie Bunker became a liberal scapegoat on television, the demise of the FDR coalition was reduced to bubba blowback.

In a sense, “All in the Family” captures decades of Democratic deliberation. The debate between old Archie (Joe Sixpack) and the young, college-educated Michael Stivic (hippie) defined the 1970s sitcom. The Democratic establishment decided that it had to choose between the two archetypes. It bet on Michael. And the Nixon-Reagan coalition dominated American politics for more than four decades.

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Way back when I was at Corrente, one of my very first blog posts was about Archie Bunker. I thought he got a bad rap. It’s ironic that he is mentioned in this context because Michael Stivic ultimately dumps Gloria and their young son and runs off to live on a commune.

For his bullheadedness, Stivic was sometimes criticized for being an elitist. He also struggled with assumptions of male superiority. He spoke of believing in female equality, but often tried to control Gloria’s decisions and desires in terms of traditional gender roles.

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Sound familiar? Meanwhile Archie mellowed over the years, became more tolerant and eventually rejected bigotry.

But wait! There’s more!

Gratuitous Clinton Bashing

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Even though it’s been out for a couple months now, Dan Froomkin decided to bring up Ron Suskind’s Confidence Men again:

In the book, Suskind describes how Obama made the conscious choice to staff his economic team with former Clinton appointees whose sympathies were with Wall Street — and that those men were unable to see how drastically out of whack the country’s financial system had gotten both because they helped create it and because it had served them so well.

Then, rather than forcefully impose his campaign’s populist vision on these men, Obama again consciously chose to defer to them repeatedly — and tolerated it even when they slow-walked, pushed back against, or simply ignored his instructions.

[...]

During his 2008 presidential campaign, Obama spoke eloquently and strikingly about the excesses of Wall Street.

[...]

In the midst of the U.S. government’s September 2008 bank bailout, Obama told a Nevada audience: “Let me be perfectly clear. The fact that we are in this mess is an outrage. It’s an outrage because we did not get here by accident. This was not a normal part of the business cycle. This was not the actions of a few bad apples.

“This financial crisis is a direct result of the greed and irresponsibility that has dominated Washington and Wall Street for years.”

And although he said it wasn’t time yet, he promised: “There will be time to punish those who set this fire.”

In October 2008, he promise to “take on the corruption in Washington and on Wall Street to make sure a crisis like this can never, ever happen again.”

And one day before he was elected president, he told a Florida audience: “Tomorrow, you can turn the page on policies that have put the greed and irresponsibility of Wall Street before the hard work and sacrifice of folks on Main Street.”

Obama’s most seminal speech on the crisis was his March 2008 address at Cooper Union. There, he laid part of the blame for the disaster on Clinton-era financial deregulation, including the 1999 repeal of the 1933 Glass-Steagall Act. That repeal, which broke down barriers between commercial and investment banking, led to the growth of financial behemoths that were able to take enormous risks with impunity because they were “too big to fail.”

“[I]nstead of establishing a 21st century regulatory framework, we simply dismantled the old one, aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight,” Obama said. “In doing so we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.”

Among the foremost champions of that deregulatory regime were the key members of President Clinton’s economic team, including Robert Rubin, who was Clinton’s treasury secretary, Larry Summers, who succeeded Rubin, and Timothy Geithner, who worked directly under both of them.

But once Obama was elected, and was staring into the maw of staggeringly large financial crisis, he made a fateful decision: He left most of his progressive economic advisers behind — including such liberal luminaries as Robert Reich and Joseph Stiglitz — and chose to go with name brand Clinton officials instead. Summers became his chief economic adviser, Geithner became his Treasury secretary, and fellow Rubin protégé Peter Orszag became his budget director. (According to Suskind, Obama even offered Rubin himself an office in the White House.)

The “bold visions of the campaign season… resolved into the serious, often risk-averse business of actually governing,” Suskind writes. “In the midst of a battering economic storm, it no longer seemed like the right time to be making waves.”

While the appointments of these men and a slew of similarly pedigreed subordinates reassured the financial markets, their leadership undermined Obama’s populist promises.

Many of them had already spent their interregnum feeding at the Wall Street trough.

[...]

Back in March 2010, I wrote for HuffPost that “people looking for the reasons why the Obama presidency has not lived up to its promise won’t find the answer amid the minor rifts between key players….. The fact is that after a campaign that appealed so successfully to idealism, Obama hired a bunch of saboteurs of hope and change.”

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Why is Froomkin blaming Bill Clinton for what the Obama administration has done (or failed to do?)

Look, if you want to make a case that Bill Clinton is responsible for the financial meltdown, then go ahead and make it. Yes, he signed the repeal of Glass-Steagall. But that bill (Gramm–Leach–Bliley Act) passed Congress with veto-proof majorities. (Senate 90-8, House 362-57) So it’s a little disingenuous to blame it all on the Big Dawg.

But does anyone really think that Bill Clinton wanted to cause a financial meltdown? In hindsight it seems easy to connect the dots, but I don’t recall hearing lots of controversy back in 1999. More importantly, the Big Dawg left office on January 2001, nearly eight years before the shit hit the fan.

What is really ridiculous is blaming Bill Clinton for what his former appointees have done since leaving his employ.

First of all, Obama had limited options if he wanted to appoint Democrats with executive branch experience. There aren’t many former Kennedy/Johnson staffers still above ground, and the Carter people are getting a little long in the tooth.

Obama picked the people he wanted. Once they were in office they were HIS people, not Bill’s. Whether they gave Obama bad advice or ignored his directions, Bill Clinton had no responsibility or control over any of them.

If you read the whole article you will see that the reason why Obama has failed to hold Wall Street accountable is right in front of Froomkin’s nose:

Consider what progressive hero Elizabeth Warren told Suskind in a September 2009 interview:

“You can’t run a policy based on a misdirection, on a fiction,” she said. “I don’t know what the president is thinking. I don’t see the president. He meets with bankers. He doesn’t meet with me. But if he’s involved in this at all, he’s got to know that his angry words at Wall Street, at their recklessness and dangerous incentives in compensation, about how they do their business in ways utterly divorced from what’s actually good for the economy — that he can’t just say that sort of thing, and then dump money in their laps and be credible.”

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Who’s the number one recipient of Wall Street donations?

B-A-R-A-C-K O-B-A-M-A

They didn’t spend all that money for nothing. He’s the best investment they ever made.

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Occupy Workplace

I wasn’t one of those people who experienced the prosperity of the Clinton administration. I had a pretty long run of unemployment and low paying jobs in the 1990s. When Bush was president, I had more years of sporadic, but better quality employment. As Hurricane Katrina was wiping out whole communities, I found the good job that I still have.

I’ll accept that I’m something of a contra-indicator. I didn’t get a good manufacturing job in the 90s that was outsourced in the 2000s. Neither am I benefiting from some great stimulus plan by the Obama administration. I may be helped by that Bush-era tax cut on lower incomes. Still, it was a matter of being at the right place at the right time.

Millions of jobs were lost due to Obama’s terrible economic policy and idiotic legislation. You can blame the aggregate number of jobs lost on the government, but blaming your individual job loss on the government is tenuous at best. Everyone has their own circumstances for losing (or getting) a job. I don’t blame Clintonomics or credit Bushonomics for my job history.

From what I’ve seen on PUMA blogs, the people who lost jobs recently seem to be the most attracted to the OWS Kool-aid. Obama coddled the big banks and those big banks invest in companies who have had trouble getting money from the big banks lately. Then there are the local governments whose budgets are so large, they’ve had to start their own austerity measures. Larger forces are at work, and there is a desire to gang up and do something about it.

You can find solace in a Tea Party rally or an Occupy protest but the place you should be heading for is a voting booth. The best way to deal with a job loss is through reciprocation. Fire the people who make government run like a rusty machine. A newbie you hate can’t do nearly as much damage as an incumbent you may kind of like. Politicians think about their legislation as a future member of the political lobbyist class, Make them think about legislation as a future member of the regular working stiff class.

Shut Down Wall Street Live Blog

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It’s Der Tag! Rise up and throw off your chains! Death to Smoochy!

Thursday November 17th, marks two months since the start of Occupy Wall Street as well as International Students Day. To commemorate this two month anniversary, Occupy Wall Street will take to the streets in celebration and in solidarity with people around the world participating in a massive global day of action in hundreds of cities.

In the wake of Bloomberg’s predawn raid of Occupy Wall Street on Tuesday morning, thousands of people throughout the five boroughs and the greater region will join together to take nonviolent action tomorrow. We will gather to resist austerity, rebuild the economy, and reclaim our democracy. We will no longer tolerate a system that only serves the very rich and powerful. Right now Wall Street owns Washington. We are the 99% and we are here to reclaim our democracy.

[...]

7:00am — Shut Down Wall Street
We will gather in Liberty Square at 7:00am, before the ring of the Trading Floor Bell, to prepare to confront Wall Street with the stories of people on the frontlines of economic injustice.

3:00pm — Occupy the Subway
We will gather at 3:00pm at 16 central subway hubs and take our own stories to the trains, using the “People’s Mic”. Details here.

5:00pm — Take the Square, Festival of Lights on Brooklyn Bridge
At 5:00pm thousands will gather at Foley Square in solidarity with laborers demanding jobs to rebuild this country’s infrastructure and economy. They will encircle City Hall and march across the Brooklyn Bridge, carrying thousands of handheld lights, as a festival of lights to celebrate two months of a new movement to reclaim our democracy.

Resist austerity. Rebuild the economy. Reclaim our democracy.

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Don’t worry about all the proles whose lives you’ll be disrupting. They’ll thank you later. When the police come and arrest you and your comrades, be sure to scream “Brutality!” and “This is what a police state looks like!” Download the new iPhone app to record yourself being beaten and tear gassed.

If 8000 people participate, that will be .01% of New York City!!!

WOOT!!

¡Viva la Revolución! ¡Hasta la Victoria Siempre!

BTW – Average attendance at a NY Yankee Imperialists home game in 2011 was 45,107 people.

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Sacred Tropes and Right-Wing Cows

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Sister Toldjah:

Remember when Barack Obama was upset at the bonuses paid to AIG execs?

[...]

When the bubble burst in 2007, Fannie and Freddie began to lose billions of dollars of investments in mortgage-backed securities (MBS) guarantees. In September 2008, the Federal Housing Finance Agency (FHFA) took Fannie and Freddie into conservatorship as a result of mounting losses stemming from the financial crisis.The Enterprises became de facto government entities, funded by preferred stock purchase agreements from the Department of the Treasury (Treasury). Today, the Enterprises remain a multi-billion-dollar drag on the federal government’s finances. Since they entered conservatorship, Treasury has provided $169 billion to Fannie and Freddie – and the payouts are scheduled to continue with no end in sight. According to recent FHFA projections, by the end of 2014, Treasury assistance to the Enterprises will total $220 billion to $311 billion.

Since the Enterprises have become government-funded entities, lavish payment packages have been doled out to their senior executives, and taxpayers have been footing the bill. In 2009 and 2010, the Enterprises’ top six officers were given a total of more than $35 million in compensation. Of that amount, a total of $17 million in compensation was given to the CEOs of the Enterprises. Additional bonus installments for 2010 may still be forthcoming, and the two CEOs stand to make a total of $12 million in 2011. In addition, an executive has been awarded a substantial signing bonus – $1.7 million – upon joining the Fannie Mae. As these figures indicate, senior executives at Fannie Mae and Freddie Mac have become the highest compensated workers on the federal payroll – making as much as eight times more than the President of the United States. The executives even make more than their conservator, FHFA Acting Director Edward J. DeMarco.

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Yeah, I know, I’m tap-dancing in a mine field for even bringing this stuff up. Somebody will point to this as evidence we’re all a bunch of tea-kissing whip-baggers or something. But since everybody already hates us what the fuck.

I’ve been trying to figure out the housing crash/financial meltdown for a couple years now. Here’s what I know:

1) It didn’t happen overnight, it took years for everything to get in place. Democrats and Republicans are both in it up to their eyeballs. Banks were involved but they weren’t the only ones.

2) I’ve read lots of explanations for what went wrong. All of them seem to make sense, but none of them seem to agree with the others. I’m not an expert so I don’t know who is telling the truth. Maybe none of them.

3) Cry racism all you want, but when you make loans to people who can’t afford to pay them back you’re going to have a high rate of defaults. On the other hand it makes no sense to pay bonuses to executives who drove their companies into a ditch.

4) Things aren’t going to change as long as we keep sending the same people back to Washington.

5) Obama is the worst president ever.

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Where did the money go?

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Let’s say it’s 1986, you’re in your mid-twenties and you and your spouse decide to buy a home for you and your two young children. You live in a medium-large city and you both have good jobs. With a little help from your parents and in-laws you manage to get a modest 3 bedroom tract home for $100,000, most of which you finance with a 30 year mortgage.

About fifteen years later you borrow against your home’s equity to put your kids through college. You support them and pay their tuitions at a nice (but not great) university. This costs you approximately $100,000 but you don’t mind.

In 2006 both your kids have finished school and are starting new careers. You and your spouse have a house bigger than your needs and you’ve grown tired of the rat race. You want to move to a smaller community with a slower pace of life.

A realtor tells you your home is now worth $300,000. If you sell it you can pay off your first and second mortgages along with your credit card debts and have enough left over to buy a small home in the rural community where you grew up nearly free and clear.

You sell the house and move. You’re not retired, but your financial situation allows you and your spouse to take lower-paying jobs without reducing your standard of living. You’re both in your early fifties and looking forward to early retirement.

One problem. You sold your old house at the peak of the housing bubble. Now that the bubble has popped the house is worth $100,000 again, and the new buyer walked away from it leaving the bank holding the note.

Are you going to give back your $200,000 ill-gotten gain?

There is a lot of anger at the housing crash and bankers are an easy target. While they certainly deserve their fair share of blame, they weren’t the only ones who cashed in during the boom.

Realtors, appraisers, inspectors, construction contractors, building supply stores, painters, roofers, and landscapers are just some of the people who profited from the housing boom. It was all good for years, then the music stopped.

People bought books and paid to go to seminars on how to “flip this house” and get rich quick. It was like a nation-wide Ponzi scheme. The people who got out before the bubble popped made out like bandits. Everyone else got left holding the bag.

Lots of people walked away from underwater mortgages. Lots of others tried or are trying to hold on to properties they can’t afford. What are we supposed to do about it?

Some people think the government should step in and fix things so they can keep their homes and have some or all of their debt forgiven. “I can’t pay my $2,000 month mortgage but I want to keep my house anyway!”

The “show the note” defense to foreclosure is based on the fact that sloppy recording practices make it hard for some banks to prove they hold the note to a property. But the hard fact is that in most of those cases the buyers really are in default and will never be able to catch up.

The banks didn’t hold a gun on anybody and tell them to borrow money. They didn’t force anyone to run up thousands of dollars in credit card debt. They didn’t make anyone take out student loans for a degree in interpretive dance.

I have no problem with investigating the housing crash and jailing those who deserve it. But a lot of what took place was legal, and the constitution prohibits ex post facto laws. We can and should make those practices illegal in the future, and we should also break up any bank that is “too big to fail.”

Banks will not change the way they do business no matter how many protesters march up and down Wall Street. They will change their ways when the law is changed. Law making takes place in Washington D.C., not New York City.

BTW – No investigation will take place while the candidate from Wall Street sits in the Oval Office.

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