Friday, October 15, 2010

Chronicles of a Crisis Foretold

Friday, like Monday, is Paul Krugman day at the New York Times. Today his column is on the new mortgage crisis.

I remember a little while back when the housing crisis was in full force, you used to hear that mortgages were "sliced and diced" and sold off to investors all over the planet, bundled in packages with portions of other financial products into a "collateralized debt obligation" and it was unclear who actually owned what. Then all the mass foreclosures came (and continue). There was a disconnect that I didn't really put together.

The disconnect was that if its true that a person's mortgage was sliced up and sold off to dozens of investors or institutions who then resold it to someone else who cut that up and sold that, etc.; then how is the original bank able to seize your home?

Evidently thats done by fraud. The banks are supposed to, at least when requested, prove that they actually own the mortgage. Since they often don't have proof, they have just been giving judges signed affidavits saying that they own it. I'm not sure why that counts at all, but even those affidavits are bullshit since the banks just print out a stack of them, and then have an autopen sign them all.

Anyway that seems to be why there is effectively a national foreclosure moratorium; done not at the federal level but state-by-state, mostly by each state's Attorney General. What's the Obama Administration got to say? Take it Krugman!

True to form, the Obama administration’s response has been to oppose any action that might upset the banks, like a temporary moratorium on foreclosures while some of the issues are resolved. Instead, it is asking the banks, very nicely, to behave better and clean up their act. I mean, that’s worked so well in the past, right?

Motherfuckers! I know Obama took in a massive amount of money from Wall Street in his election, but I think he has paid back his friends well enough. And on top of that Wall Street is pouring money into Republican campaigns for the mid-terms, so what is Obama's deal? Preparing for 2012 financing?

In any case, I think its a bad move. He can't stop these moratoriums (to my knowledge) since its at the state level, so what is the utility in publicly coming out against them? Right before an election? He could at least couple it with a constructive solution, but I have yet to see that.

And on this point I want to emphasize that I am tired of these articles or comments on liberals (like me) upset with Obama must (a) be the type of people who are never satisfied, because he accomplished so much but they want more; and or (b) thought he was some magical wizard who could solve the nations problems, but now are disappointed to see he is human.

There are liberals who are upset with Obama for specific reasons, and for specific positions or actions he has taken. This is one.

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