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.