A friend told me a while back about some incredibly disturbing comments made by National City Bank chief economist Richard DeKaser on this March 26th Sound of Ideas broadcast hosted by Dan Moulthrop over at WCPN. The gist of the rep's closing comment, heard at the end of the *.MP3, is that we shouldn't take action to correct the problems of the foreclosure situation on the backs of the lenders who created the problems in the first place; doing so would ruin the housing market, which needs to be "vibrant and healthy."
The implication is that, in order not to ruin the markets, we should allow the fraudulent processes to continue to devastate our neighbors; we should allow the lenders to continue to strip the equity from our communities and take it to themselves, to seize the property, evict our neighbors, and sit on the equity until things get better, when they can get "new people" into these same houses and start the unhealthy processes all over again. We should allow them to continue make their money on the backs of our community.
The disturbing thing is, Richard is a highly articulate and recently acclaimed expert saying that action to force the lenders to abrogate past contracts and mitigate the damage to individuals would ruin the market. I don't quibble with this. As usual, he is forecasting quite correctly, and that's what he's noted for being able to do well. Any action we take now to save our communities will undoubtedly cause pain and perhaps even ruin for more than a few of these bankers.
What I do take issue with is where he's trying to place the blame for ruining things, making things bad for the housing market, compelling a flight of capital and industry, knocking the legs out from under the lending business. He wants to lay the blame on those who would go against the lenders now, requiring them to do the right thing and correct the past fraudulent takings. What he doesn't do is have the banks take ownership of the mess, and that's really disturbing.
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The issue in the podcast that got totally ignored was the culpability of the appraisers who allowed the predatory loan to go through. It flabergasts me that some people get a loan on a house with a supposed value way higher than the actual market value. The incentives the one caller mentioned were not addressed adequately and never are during these discussions. it's a frustrating issue, isn't it.
ReplyDeleteIt's especially frustrating when conventional media are not giving it the proper play. They have built-in conflicts of interest because of how they advertise, and overall MSM corporate policy seems to be not to bite the hand that feeds; the business model is seriously flawed.
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