Foreclosure-Gate: Mortgage Settlement Collapsing?

08-15-2011 • Market-ticker.org

Geithner may try, but he cannot compel Attorneys General in both parties to settle for pennies on the dollar and relinquish all of their liability for consumer protection violations and fraud upon state courts. He cannot influence investors who see a giant meal ticket in the form of forcing big banks to repurchase faulty mortgage backed securities. If there was a magic bullet in this debacle, it would already have been fired. Now that sounds interesting. We know that the banks have been furiously lobbying in Washington DC to cast off the liability for their former actions. The problem? These are state law issues and Washington DC has no jurisdiction - even though it would like to so it can accept their bribes, er, "campaign contributions" to make it all go away. They’ve trotted out Kathryn Wylde, the President of the Partnership for New York City, to attack Eric Schneiderman for his intervention in the Bank of America settlement with investors over mortgage backed securities. Wylde is going to bat for BofA as well as the Bank of New York Mellon, the trustee for the MBS in the settlement. And she is actually arguing that Schneiderman, by defending the rights of investors and seeking the truth on out and out securitization fraud, is threatening the existence of the financial sector in New York City. No, really. That's nothing new. The old "tanks in the street" argument is repeatedly trotted out - "the economy will collapse if you don't let us continue to loot!" Of course the problem with such a premise is that there's only so much blood in the vampire's victims, and eventually it all gets sucked out. Then the victim undergoes circulatory collapse and the looting stops, like it or not. We're there folks.