Here’s what is going to happen: Congress will pass a law called something like “The Financial Modernization and Stability Act of 2010” that will retroactively grant mortgage pools the rights in the underlying mortgages that people are worried about. All the screwed up paperwork, lost notes, unassigned security interests will be forgiven by a legislative act....
The [foreclosure] crisis is not driven by economics. It is driven by legal rights. And there’s simply zero probability that the politicians in Washington are going to let Bank of America or Citigroup or JP Morgan Chase fail because of a legal issue.
Carney predicts that the lame-duck session of Congress following this November's elections will pass the law. "Every member of Congress ... who has been voted out of office will cast a vote for the bill. And the President will sign it."
Major banks' stocks have suffered losses this week as an increasingly large body of evidence has emerged suggesting that banks and their contractors may not have done the most basic vetting of foreclosure paperwork, instead using "robo-signers" to rubber-stamp whatever foreclosure applications were brought forward.
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