Fraudclosure and the American way

The BBC has belatedly noticed that there is a problem with the foreclosure business in the US as I reported in my last post, but entirely fails to convey just how very big and very bad the problem is.

For instance, the BBC reports that:

Some US banks have already imposed their own moratorium on foreclosures while they investigate possible legal flaws in the eviction process.

Well, yes!  If by that you understand that the TBTF banks and their agents are up to their necks in fraud.  It turns out that in the process of slicing and dicing bundles of mortgages the rather important issue of just exactly who owns the title to the property and who owns the mortgage note (the legal IOU) is unknown.  It’s disappeared somewhere in the paper trail.

In a great many cases the banks or their agents have resorted to forging the necessary paperwork including affidavits.  An affidavit is, as I understand it, a sworn statement made in lieu of a personal appearance in court and forging it is perjury pure and simple.  So, not quite the “possible legal flaws” and “shoddy paperwork” that the BBC reports.   It’s not so much foreclosure as fraudclosure.

Team Obama’s response is also worrying.  Robert Gibbs, White House spokesman, is quoted as saying:

“We want to take the just and necessary steps to ensure that the process is being followed legally.  At the same time, we don’t want to see broader harm done to the housing market and to the housing recovery.”

The proposition here is that the rule of law is somehow opposed to economic prosperity.  What nonsense!  Economic prosperity is built on the rule of law.  What he really means is that the White House priority is to look after out some very rich and powerful people who have made bad investments and now want to be bailed out.   At issue is whether the rule of law is to defend rights and democracy or merely a mechanism to further the interests of the powerful and reduce the US to a banana republic.

Just how serious this is proving is well illustrated by Gonzalo Lira’s latest post in which he documents the impact on the attitudes of a retired couple he knows.  The tectonic plates are moving under America. 

In effect, a crisis that started out as a purely financial crisis has morphed into something much bigger and more dangerous – a crisis of the rule of law, of society and even of the legitimacy of the US system.  The political ramifications are incalculable.  And, of course, if the TBTF banks have carelessly lost the security for their non-performing loans they are bust all over again.  That will cross the Atlantic for sure.

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One response to this post.

  1. […] the Coalition, is that it should be the taxpayer, in part directly by bailing out the foolish (and sometimes criminal as we will eventually discover) bankers, in part by supporting the economy via deficit spending to […]

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