Alain Sherter writes for BNET that perhaps what we should be looking for is a series of steps toward financial reform over a period of years instead of feeling that the very modest financial reform bill passed by Congress is the end of the process.
That’s very optimistic on his part. I consider a solid victory for wall street, a humiliating defeat for the nation and its people. This charade of public concern, private deal making and campaign fund collection demonstrates why American democracy is disintegrating in the face of corporate money.
Here’s the kind of leadership we need and deserve instead of the bloodless passionless leadership we have.
It’s a sad day. But it’s been years now since the word, reform, became a joke and cover for every ridiculous, mendacious and counterproductive scheme developed by the mind of the bottom dwelling scum eating legislator to squirm along the channel of campaign contributions.
So, we’re getting “reform.” Very little or nothing masquerading as substance. Great. It’s like substituting grass for all those green vegetables in your diet. It looks green. And isn’t that the same thing?
James Pilant
Here’s a video of Barney Frank. He would seem to have not been a reliable prophet of the mortgage crisis.
Rating Agencies Were Part Of The Disaster On Wall Street
If the rating agencies were key players in the financial mismanagement that destroyed eight million jobs and threatened the world’s economy, why are they not included in the financial reform bill now before the Senate? Alain Sherter wants to know why. So do I.
This is a report from “Now” – a PBS program. In this particular episode an insider from a credit rating agency explains what happened.
Here is Alain Sherter explaining more about this ratings disaster –
The ratings agencies business model is based on a flagrant conflict of interest — they’re paid by the firms whose credit they evaluate. That makes them vulnerable to pressure from investment banks and securities issuers, which naturally want a bullet-proof rating in order to attract investors.
In the years leading up to the housing bust, Moody’s, S&P and Fitch passed out AAA ratings like candy bars at Halloween. In mid-2007 and early 2008, with the real estate market in free-fall and mortgage delinquencies soaring, they suddenly started downgrading scads of formerly top-rated securities. In January of ‘08, for instance, S&P lowered ratings on more than 6,300 and 1,900 CDOs — in a single day. Then, the deluge. The bottom fell out of the secondary market for subprime loans, and the rest is history.
Without the credit rating industry giving triple A ratings to these risky investments, the tragedy that has engulfed and continues to damage the lives of so many Americans would not have been possible.
What are these people not being called on the carpet or prosecuted for conduct that seems to many observers to look very similar to fraud?
Alain Sherter’s work appears on BNET. He is a great writer and thinker whose work often points in original directions. His outrage over the ethical shortcomings of American business mirrors my own.
Banks that foreclose on a home must first prove they own the mortgage. So affirmed the top Massachusetts court today in ruling against U.S. Bancorp (USB) and Wells Fargo (WFC) in a decision could boost homeowners fighting foreclosure and end up costing banks billions.
One financial expert told Bloomberg the ruling could “open the floodgates” to similar suits in the state and bolster cases around the nation. Financial pundit Barry Ritholtz also called the ruling a victory for the rule of law and property rights, noting in a related post discussing the case:
This is more than a technical issue; at risk is whether we, as a nation, are going to allow corporate entities to violate existing law, or even worse, attempt to create their own, extra-legal, non democratic policies.
Certainly investors seem worried. U.S. Bancorp and Wells shares immediately dipped on the news, with broader bank stocks also tumbling. It’s no secret why. As the “robo-signing” furor has shown, banks for years have flouted legal requirements to document their right to seize homes. Foreclosure affidavits were rubber-stamped or even faked. Local laws regarding property transfers were ignored. Financial firms eager to mince mortgages up into securities violated rules intended to establish a clear chain of title in foreclosure cases.
Alain Sherter’s regular column, Financial Folly, is an invaluable guide to the shenanigans of the financial world. I recommend him to you.
Yes, it can. Ira Hecht proposes the creation of an online market for troubled mortgages to be called: Mortgage Crisis Solution Program. The program would allow those with troubled mortgages to enter their data onto the database, (with privacy protections of course), and lenders would be able to find troubled mortgages worthy of re-financing. Obviously, this would not solve the mortgage crisis. But it would allow those who have short term difficulties to negotiate to keep their homes. Many people with good credit and properly valued homes deserve an opportunity to refinance.
This is an idea that should be developed. In this country much of the devotion to the free market is the most shallow of lip service. This would be government service to put lenders and borrowers together. If it’s socialism to put these people together, we need more of it. We should be encouraging this type of exchange, allowing individuals to profit while saving people’s homes.
Andrew Caplin has been writing about problems in the mortgage market for years. He is an economist and important author in the field. He thinks this is a good idea.
Let’s let the free market help this country in its time of need.
Pilant's Business Ethics Blog 
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