So here’s what I expect will happen. The lame duck session of Congress will pass a bill that essentially papers over the misdeeds of the banks that originated mortgage securities. Every member of Congress and every Senator who has been voted out of office will cast a vote for the bill. And the President will sign it.
Will the public be outraged? Probably. Financial bloggers will scream from the high heavens against another bailout of the banksters. Congress may try to create some cost for banks in exchange for the forgiveness, perhaps requiring more mortgage modifications.
But the much feared put-back apocalypse will be laid to rest.
If you’re skeptical about the possibility that this will happen, you have greater faith than I do in the ability of the political system to resist doing favors for bankers.
Carney is clearly underestimating someone here. Oh, not Republicans in Congress. He's right that this is exactly what they will try to do. I think he's underestimating the President and Democrats somewhat, but not by much.
But Carney is completely underestimating the American people. The second this happens, you will have an event which will put the Teabaggers, the Centrist Daleks, and the Dirty F'ckin Hippies on the same side, and it will be a dangerously beautiful thing. It would be a visceral reaction out there: Congress just passed a law allowing the banks to get away with stealing people's homes.
Madness. You thought people hated TARP? This would be riot-inducing, not to mention morally and legally wrong as hell. It would be over for this administration, not to mention Congress.
I just don't see how this happens. It can't.
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6 comments:
What do you mean you don't see how this happens? How is Carney not right about Obama giving the banks another bailout?
Heh, well, it's hard to justify another bailout when the problem is theft and fraud, instead of simple insolvency.
You're kidding, right? That's exactly why they will get away with it, just like last time. They always will. Nobody gets to be President without letting the banks fuck us. Obama is no different.
You're a fool if you expect otherwise.
Zandar:
Carney is stupid for another reason.
The bill he predicts won't solve the problem. The problem isn't banks with imperfect title foreclosing on homes.
The problem is securities sold to institutional investors dervived from mortgages with imperfect title.
If it was the homeowners getting screwed, yeah, maybe. As he says, that's a legal thing with a legal fix. But the derivatives are an economic thing. Buyers got stuck with bad paper that they may now be able to claim were fraudulently represented.
And those buyers have a hellava lot more juice than some schmuck in Nevada underwater on a house.
I don't think it's as easy as Carney thinks. Property and Real Estate Law are the domain of the States. Congress can't just pass a law saying "nevermind the states" -- the courts would never uphold it, and it won't stave off shit.
All it will take is one or two states to say "F- YOU" to Congress, and the rest will be emboldened to do the same.
However, that said, I think Zandar, you also underestimate the apathy of the American people. If I'm wrong about the above, I can easily see the bread- and circus-addled american silent majority just going "Yea, whatever dude, as long as I can still watch Mad Men and afford Hot Pockets and fuel my SUV." It's happened so many times before, it's bound to happen again.
The only thing that's going to snap the US out of its apathetic slide towards total corporate totalitarianism is a complete economic collapse, or decades of brutal fascism. We're headed for one of the two.
I dunno. Getting thrown out of your home prevents people from watching Mad Men pretty effectively.
Also, as jfx says, the Hedge Fund Billionaires are the ones who stand to lose big from investments. They're not going to roll over.
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