February 19, 2010
Alain Sherter’s work appears on BNET. He is a great writer and thinker whose work often points in original directions. His outrage over the ethical shortcomings of American business mirrors my own.
Here’s a sample of his writing -
Banks that foreclose on a home must first prove they own the mortgage. So affirmed the top Massachusetts court today in ruling against U.S. Bancorp (USB) and Wells Fargo (WFC) in a decision could boost homeowners fighting foreclosure and end up costing banks billions.
One financial expert told Bloomberg the ruling could “open the floodgates” to similar suits in the state and bolster cases around the nation. Financial pundit Barry Ritholtz also called the ruling a victory for the rule of law and property rights, noting in a related post discussing the case:
This is more than a technical issue; at risk is whether we, as a nation, are going to allow corporate entities to violate existing law, or even worse, attempt to create their own, extra-legal, non democratic policies.
Certainly investors seem worried. U.S. Bancorp and Wells shares immediately dipped on the news, with broader bank stocks also tumbling. It’s no secret why. As the “robo-signing” furor has shown, banks for years have flouted legal requirements to document their right to seize homes. Foreclosure affidavits were rubber-stamped or even faked. Local laws regarding property transfers were ignored. Financial firms eager to mince mortgages up into securities violated rules intended to establish a clear chain of title in foreclosure cases.
Alain Sherter’s regular column, Financial Folly, is an invaluable guide to the shenanigans of the financial world. I recommend him to you.
February 19, 2010
Yes, it can. Ira Hecht proposes the creation of an online market for troubled mortgages to be called: Mortgage Crisis Solution Program. The program would allow those with troubled mortgages to enter their data onto the database, (with privacy protections of course), and lenders would be able to find troubled mortgages worthy of re-financing. Obviously, this would not solve the mortgage crisis. But it would allow those who have short term difficulties to negotiate to keep their homes. Many people with good credit and properly valued homes deserve an opportunity to refinance.
This is an idea that should be developed. In this country much of the devotion to the free market is the most shallow of lip service. This would be government service to put lenders and borrowers together. If it’s socialism to put these people together, we need more of it. We should be encouraging this type of exchange, allowing individuals to profit while saving people’s homes.
Andrew Caplin has been writing about problems in the mortgage market for years. He is an economist and important author in the field. He thinks this is a good idea.
Let’s let the free market help this country in its time of need.
February 19, 2010
Consumers continually suffer under the depredations of banks and credit card companies. But they are not the only sufferers. Margot Dorfman, President of the Women’s Chamber of Commerce, says that banks have cut lending to small business by 14 billion over the last year.
Small business often relies on credit cards, home equity loans and personal loans to finance their businesses. They are just as much as the mercy of the financial institutions as any individual.
Listen to what Ms. Dorfman has to say: