Yves Smith: top 12 reasons why the mortgage deal stinks

jumping to the closing line, "...this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me"... we knew that, though, didn't we...?

yves smith writing in naked capitalism...

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

10. A deal on robosigning serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.

repeating myself from the previous post, it's sad, so very sad...

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Yves Smith in Naked Capitalism: the mortgage "settlement" is a stealth bank bailout

and why would we be surprised...?

Schneiderman MERS Suit and HUD’s Donovan Remarks Confirm That Mortgage “Settlement” is a Stealth Bank Bailout

In case you had any doubts about what the mortgage settlement was really about and why banks that were so keenly opposed to it are now willing to go ahead, the news of the last two days should settle any doubts.

As we had indicated earlier, one of the many leaks about the settlement showed that there had been a major shift its parameters. Of the $25 billion that has been bandied about as a settlement total for the biggest banks, comparatively little (less than $5 billion) is in cash. The rest comes in the form of credits for principal modifications of mortgages.

Originally, that was to come only from mortgages held by banks, meaning they would bear the costs. The fact that this meant that whether a homeowner might benefit would be random (were you one of the lucky ones whose mortgage had not been securitized?) was apparently used as an excuse to morph the deal into a huge win for them: allowing the banks to get credit for modifying mortgages that they don’t own.

The first rule of finance (well, maybe second, “fees are not negotiable” might be number one) is always use other people’s money before your own. So giving the banks permission to modify loans they don’t own guarantees that that is where the overwhelming majority of mortgage modifications will take place, ex those the banks would have done anyhow on their own loans. And the design of the program, that securitized loans will be given only half the credit towards the total, versus 100% for loans the banks own, merely assures that even more damage will be done to investors to pay for the servicers’ misdeeds.

Let me stress: this is a huge bailout for the banks. The settlement amounts to a transfer from retirement accounts (pension funds, 401 (k)s) and insurers to the banks. And without this subsidy, the biggest banks would be in serious trouble

Why? As leading mortgage analyst Laurie Goodman pointed out in a late 2010 presentation, just over half of the private label (non Fannie/Freddie) securitizations have second liens behind them (overwhelmingly home equity lines of credit). Moreover, homes with first liens only have far lower delinquency rates than homes with both first and second liens. Separately, various studies have found that defaults are also correlated with how far underwater a borrower is. If a borrower is too far in negative equity territory, it makes less sense for them to struggle to stay current, no matter how much they love their home.

[...]

The Obama Administration may have decided that investors have acted enough like patsies, given how they have failed to react to rampant servicer abuses, that they judge the risk of investor litigation and a related PR embarrassment to be small. But this battle is not yet over. The rumblings I am hearing from investor-land remind of the sections of the Lord of the Rings when the Ents were finally roused. It isn’t yet clear that investors will act, but if they do, the Administration will be unprepared for the vehemence of their response.

great... let's throw even MORE money at the criminal banksters...

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Calling bullshit on the White House and the SOTU - "Building a country ... where everyone is accountable for what they do"

this does NOT sit well with me...

White House aides said Monday that Obama will build on a speech he gave in Kansas last month. In it, Obama laid out what he called the two competing visions, a Republican blueprint for survival of the fittest that trusts unregulated markets to lift the country, and his vision, which asks the government to take an active hand.

"The State of the Union will be a bookend to the president's speech in Kansas last month about the central mission that we have as a country and his focus as president: Building a country and an economy where we reward hard work and responsibility, where everyone does their fair share, and where everyone is held accountable for what they do," White House Press Secretary Jay Carney said Monday.

boy, i sincerely hope obama uses those very words in the SOTU because they deserve to be hung around his neck like an albatross... obama came into office with one of the biggest opportunities to demonstrate and enforce accountability that have been given to any president in the history of this country and he not only blew them off, he made the principles of accountability and the rule of law in the united states global icons of hypocrisy...

i'm not going to chronicle the multiple instances where obama has given the finger to accountability... i've posted on it more times than i care to count along with folks like glenn greenwald, chris hedges and others... obama's record on accountability is nothing short of shameful and that he could even be considering pushing accountability as a focus in the sotu is beyond laughable... and yet he continues to add fuel to the fire as dean baker points out in today's piece on the mortgage fraud "settlement"...

Is the Obama Administration Soft on Crime?

That would seem to be the case from the leaks about a mortgage settlement which would reportedly give the banks and their executives immunity for all their misdeeds connected with the housing bubble in exchange for $20 billion in principle write-downs on underwater mortgages. And, Naked Capitalism reminds us that this $20 billion need not even come out of the banks' pockets. This includes write downs on mortgages that they are servicing, which means that the money would come out of investors' pockets.

Apart from the limited money at stake, the question is why would there be a reason to grant immunity for criminal wrong-doing? If people at these banks committed fraud, for example by lying about possessing documents that they did not possess, lying about the terms of loans to mortgage applicants or misrepresenting the mortgages in pools to investors, then why would we want to give them a get out of jail free card?

If no such fraud was committed, then there is no reason to include this sort of immunity in a settlement. The only reason to grant immunity of this type is if fraud was committed and the Obama administration wants to let the bankers off the hook.

i really don't want to watch the sotu tonight but probably will only if i have a good supply of anti-nausea medication on hand...

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Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage "Settlement" [UPDATE]

yves smith posting at naked capitalism...

[UPDATE]

Protesters Demonstrate in Front of Foreclosure Fraud Settlement Meeting in Chicago

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Suing the banks - about freakin' time...!

more like this...

U.S. Is Set to Sue a Dozen Big Banks Over Mortgages

The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

it's 1:45 a.m... i fell asleep around 6 p.m. with my clothes on and am just now getting up to go back to bed... still recovering from jet-lag, i guess...

anywayz...

doing a late-night email check, i ran across the above, guaranteed to put a smile on my face... how sad that even the slightest evidence of any accountability whatsoever can make my heart flutter...

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What a sorry state of affairs...! Just look at this grab-bag of shit...!

Looting Frenzies: Thinking about the Federal Reserve while Nursing a Cheap Beer

The Federal Reserve used to tell us how many dollars were in circulation, but in March of 2006, it stopped. A sane man would deduce that it wanted to hide how much inflation it was generating, but, no, this sudden opacity was merely a cost cutting measure, so explained the Fed, the profligate, money pumping Fed.

To grasp immediately how much your dollar has depreciated, look no further than the price of gold. In 1982, an ounce was less than $500. Now it has breached $1,800. Surging gold price also indicates that people are losing faith in their economic, political and social system, and that they fear the immediate future. When gold shoots up, this house is coming down. Wander into any Vietnamese or Cambodian neighborhood, you’ll see an inordinate number of jewelry stores selling gold. People who have been traumatized by war and dictatorship don’t trust in banks or even money, but only gold to help them survive any societal upheaval.

So if the dollar is sinking, why accumulate it? First off, foreign governments must have dollars to buy oil, since no country can sell petroleum for anything but the dollar. The only renegades to this rule are Iran and Venezuela. Accepting Chinese yuans for oil, they have constantly been threatened by Washington. If euros, yens, yuans or rubles were generally accepted for oil, the United States would quickly become irrelevant and no one would have to send us real products for our increasingly worthless paper.

This petro dollar arrangement is enforced by the U.S. military. As Saddam Hussein and Muammar Gaddafi have found out, America will rain bombs on your people’s heads if you try to escape from this racket. Gaddafi wanted to nationalize Libya’s oil fields. He also proposed a common currency for Africa. In their trade with each other, African countries could then be free from the tyranny of the dollar, but such insolence could not go unpunished. America will hold a gun to your head to make sure you go on biting its bucks.

but wait, there's more...

how interesting that THIS story never made any real headlines until AFTER the credit rating cut...

U.S. Inquiry Eyes S.& P. Ratings of Mortgages

The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.

The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it is likely to add fuel to the political firestorm that has surrounded that action. Lawmakers and some administration officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.

matt taibbi talks about the whitewashing of the records of criminals...

Is The SEC Covering Up Wall Street Crimes?

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

meanwhile, in the uk...

The stench of a police state

The events of the last 12 days are a warning to the working class in Britain and internationally. The state repression and right-wing hysteria unleashed in response to youth rioting in London and other cities reveal the preparations of the ruling class for police-state forms of rule.

The riots were triggered by the police execution of Mark Duggan, a black 29-year-old father of four, in Tottenham, north London on August 4, followed by an unprovoked police assault on a peaceful protest over his killing two days later. Almost a fortnight later, no officer has been identified, let alone charged, for these crimes.

Instead, the political elites who sanctioned the looting of public funds to bail out the banks and the super-rich, and who covered up the illegal phone hacking of Rupert Murdoch’s media empire, have sought to whip up a lynch mob atmosphere against the “criminality” and “immorality” of working class youth.

Cheered on by the Labour Party, Prime Minister David Cameron and his Conservative-Liberal Democrat government have organized vicious state repression, authorizing the use of water cannons and plastic bullets and the possible use of the army against further social unrest.

Basic democratic rights have been thrown to the winds. The presumption of innocence has been jettisoned as police carry out mass arrests, with those detained subject to show trials presided over by courts acting directly at the behest of the authorities.

Some 3,000 people, the majority aged between 16 and 24, have been rounded up in sweeps across the capital and elsewhere, with police battering down the doors of people’s homes for what are, in the main, petty misdemeanours. The names and photographs of people not even charged with any offence—let alone found guilty—are broadcast daily by the media. Juvenile defendants, some as young as 11, have been stripped of their right to anonymity.

naomi klein with more on the uk offers a very perceptive comparison to argentina...

Looting With The Lights On

Argentina, circa 2001. The economy was in freefall and thousands of people living in rough neighbourhoods (which had been thriving manufacturing zones before the neoliberal era) stormed foreign-owned superstores. They came out pushing shopping carts overflowing with the goods they could no longer afford – clothes, electronics, meat. The government called a "state of siege" to restore order; the people didn't like that and overthrew the government.

Argentina's mass looting was called el saqueo – the sacking. That was politically significant because it was the very same word used to describe what that country's elites had done by selling off the country's national assets in flagrantly corrupt privatisation deals, hiding their money offshore, then passing on the bill to the people with a brutal austerity package. Argentines understood that the saqueo of the shopping centres would not have happened without the bigger saqueo of the country, and that the real gangsters were the ones in charge. But England is not Latin America, and its riots are not political, or so we keep hearing. They are just about lawless kids taking advantage of a situation to take what isn't theirs. And British society, Cameron tells us, abhors that kind of behaviour.

This is said in all seriousness. As if the massive bank bailouts never happened, followed by the defiant record bonuses. Followed by the emergency G8 and G20 meetings, when the leaders decided, collectively, not to do anything to punish the bankers for any of this, nor to do anything serious to prevent a similar crisis from happening again. Instead they would all go home to their respective countries and force sacrifices on the most vulnerable. They would do this by firing public sector workers, scapegoating teachers, closing libraries, upping tuition fees, rolling back union contracts, creating rush privatisations of public assets and decreasing pensions – mix the cocktail for where you live. And who is on television lecturing about the need to give up these "entitlements"? The bankers and hedge-fund managers, of course.

This is the global saqueo, a time of great taking. Fuelled by a pathological sense of entitlement, this looting has all been done with the lights on, as if there was nothing at all to hide. There are some nagging fears, however. In early July, the Wall Street Journal, citing a new poll, reported that 94% of millionaires were afraid of "violence in the streets". This, it turns out, was a reasonable fear.

Of course London's riots weren't a political protest. But the people committing night-time robbery sure as hell know that their elites have been committing daytime robbery. Saqueos are contagious. The Tories are right when they say the rioting is not about the cuts. But it has a great deal to do with what those cuts represent: being cut off. Locked away in a ballooning underclass with the few escape routes previously offered – a union job, a good affordable education – being rapidly sealed off. The cuts are a message. They are saying to whole sectors of society: you are stuck where you are, much like the migrants and refugees we turn away at our increasingly fortressed borders.

Cameron's response to the riots is to make this locking-out literal: evictions from public housing, threats to cut off communication tools and outrageous jail terms (five months to a woman for receiving a stolen pair of shorts). The message is once again being sent: disappear, and do it quietly.

before i sign off on this post, let's turn back to the u.s. and yet another (god save us all) shit-kickin' texan, governor goodhair (with deep thanks to the late molly ivins)...

Perry Reveals Plan for Total US Anarchy

Today, Gov. Rick Perry (R-TX) issued the first policy position of his presidential campaign by asking the White House to issue a “moratorium on regulations across this country”:

We’re calling today on the president of the United States to put a moratorium on regulations across this country, because his regulations, his EPA regulations are killing jobs all across America..

i simply can't describe the sinking feeling i get reading this kind of news... and, believe me, it's not made one whit easier reading it from here in kabul...

oh, well...

today's a day off (afghan holiday) and i'm kicking back and looking forward to going out to dinner this evening with a good afghan friend and his lovely wife... it'll be a nice break...

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Krugman - The rich are different from you and me: when they break the law, it’s the prosecutors who find themselves on trial

krugman's column in yesterday's nyt highlights, once again, the extreme lack of accountability our banksters have come to expect while fleecing us poor peasants out of every single dime...

The immediate flashpoint is a proposed settlement between state attorneys general and the mortgage servicing industry. That settlement is a “shakedown,” says Senator Richard Shelby of Alabama. The money banks would be required to allot to mortgage modification would be “extorted,” declares The Wall Street Journal. And the bankers themselves warn that any action against them would place economic recovery at risk.

All of which goes to confirm that the rich are different from you and me: when they break the law, it’s the prosecutors who find themselves on trial.

[...]

In the days and weeks ahead, we’ll see pro-banker politicians denounce the proposed settlement, asserting that it’s all about defending the rule of law. But what they’re actually defending is the exact opposite — a system in which only the little people have to obey the law, while the rich, and bankers especially, can cheat and defraud without consequences.

and what little power the peasantry has left in the form of collective bargaining rights, the right to petition for redress, and even the ability to voice our concerns in peaceful assembly are being systematically stripped away...

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The Fed wants to act to make the foreclosure crisis and predatory lending WORSE...?

what the hell is wrong with these people...?

Fed wants to strip a key protection for homeowners

As Americans continue to lose their homes in record numbers, the Federal Reserve is considering making it much harder for homeowners to stop foreclosures and escape predatory home loans with onerous terms.

The Fed's proposal to amend a 42-year-old provision of the federal Truth in Lending Act has angered labor, civil rights and consumer advocacy groups along with a slew of foreclosure defense attorneys.

They're not only asking the Fed to withdraw the proposal, they also want any future changes to the law to be handled by the new Consumer Financial Protection Bureau, which begins its work next year.

In a letter to the Fed's Board of Governors, dozens of groups that oppose the measure, including the National Consumer Law Center, the NAACP and the Service Employees International Union, say the proposal is bad medicine at the wrong time.

"At the depths of the worst foreclosure crisis since the Great Depression, we are surprised that the Fed has proposed rules that would eviscerate the primary protection homeowners currently have to escape abusive loans and avoid foreclosure: the extended right of rescission."

Because the public comment period on the Fed's proposal is still open until Dec. 23, a spokesman declined comment on the matter.

But in a September passage in the Federal Register, the Fed said the proposal was designed to "ensure a clearer and more equitable process for resolving rescission claims raised in court proceedings" and reflects what most courts already require.

Since 1968, the Truth in Lending Act has given homeowners the right to cancel, or rescind illegal loans for up to three years after the transaction was completed if the buyer wasn't provided with proper disclosures at the time of closing.

Attorneys at AARP have used the rescission clause for decades to protect older homeowners stuck in predatory loans with costly terms. The provision is also helping struggling homeowners to fight a wave of foreclosure cases in which faulty and sometimes-fraudulent disclosures were used.

The violations must be of a material nature to invalidate a loan under the extended-rescission clause. To do so, homeowners — usually those facing financial problems or foreclosure — hire an attorney to scour their mortgage documents for possible violations regarding the actual cost of the loan or payment terms.

If problems are found, a notice of rescission is sent to the creditor, which can either admit to the alleged violation or contest it in court.

Creditors that end up rescinding a loan are then required to cancel their "security interest," or lien, on the property.

Once that occurs, the homeowner must then pay the outstanding loan balance back to the lender — minus the finance charges, fees and payments already made.

Dropping the lien provides homeowners with a defense against foreclosure and allows them to refinance to pay the outstanding loan amount.

Critics say the proposed change by the Fed would render the rescission clause useless. The Fed proposal would require homeowners who seek a loan rescission through the courts, to pay off the entire loan balance before the lender cancels the lien.

so, you can't come up with the money to re-finance until you get out of the current loan and you can't get out of the current loan until the lien is released... now, THERE'S a catch-22...

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Woo-hoo...! Goldman Sachs accused of fraud

holy shit...! an actual whiff of accountability...!

Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.

The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.

a good sign...

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Here's some eye-popping home price data

courtesy of mish's global economic trend analysis...

first, the median house price decline over the past 12-41 months (depending on area) from the california association of realtors...


Click on image for larger version

now, the national picture covering 20 cities from case-shiller...


Click on image for larger version

wow...! (and that's all i've got to say...)

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Crony Senility

The guy is outta his mind.

McCain: Feds shouldn't do much about mortgage crisis

By Matt Stearns McClatchy Newspapers

WASHINGTON — Sen. John McCain, R-Ariz., on Tuesday called for mortgage lenders to help struggling homeowners stay in their homes, but said government's role should be temporary and limited.

[...]

"It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," McCain said in a speech in Santa Ana, Calif. "Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy."


McCain said that the Federal Reserve's bailout of Bear Stearns met his criteria. But he offered no specific federal proposals to aid homeowners facing foreclosure. He promised to evaluate proposals "based on their costs and benefits," but he didn't address any of the solutions percolating on Capitol Hill.

[...]

After the speech, McCain adviser Doug Holtz-Eakin rejected the type of foreclosure moratorium that Clinton has pushed, saying it doesn't "address why someone is in foreclosure."


"As harsh as it may sound, that may be an appropriate outcome in some cases," Holtz-Eakin said.

[...]


Carly Fiorina, a McCain adviser, conceded that "there are clearly some mortgage lenders that are not in a position to do this" because many are in financial straits because of bad loans.


"It could be that this spawns a wave of consolidation in the mortgage lending industry that is appropriate," Fiorina said. "Consolidation is not a bad thing. It's a healthy market response."

Oh, that's rich, Carly! Let's monopolize the mortgage lending industry like we did the MSM. Got to take care of our obscenely wealthy cronies dontcha know.

I especially like that part about the Fed's bailout of Bear-Stearns met his criteria.

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