What a shock! The White House siding with the banks! Who would have thought it? Well, me. I was shocked the President pocket vetoed the legislation that would have retroactively made the banks false affidavits a non problem, but I needn’t have worried this meant a change of policy.

The banks will be protected. Homeowners are not that big a deal, but banks, no matter what they’re doing (unethical, illegal, cruel, vicious, incompetent- those things), will be protected.

Well, the President figured he’d stand firm, conduct a cursory investigation, which would be kept well in hand, and it would all go away.

Wrong, the crisis keeps rolling and keeps getting bigger.

Now, listen up, this is not the fault of Rahm Emanuel, Larry Summers, the President’s Council of Economic Advisers, or the Fed. The President of the United States is making these decisions. There is only one guy in charge at the White House and unless they’re holding his family hostage, he is the architect of his own decisions.

The President once said, “My administration is the only thing between you and the pitchforks.” How about, “and the law, and justice and accountability?”

I think those ought to be in there too.

Well, the crisis continues. This is Jill Schlesinger from CBS’ Moneywatch –

Banks are against the moratorium because it could call into question larger documentation issues, which could in turn put the nation’s biggest financial institutions on the hook for breaches of representations and warranties made to buyers of mortgage-backed securities. If there were a breach, the buyers of the loans in question could “put back” the loans to the banks, forcing the banks to repurchase them for face value or to make the owner of the mortgage whole for the losses incurred. Some analysts have estimated the potential cost of putbacks to banks to be over $100 billion.

Let’s talk about this “putback” thing a little bit. Soon, you may hear about little else in the news!

You see the banks unloaded all these nasty securities packages on pensions funds, etc., selling them as if they were good values without disclosing their inherent flaws because the purchasers were “knowledgeable investors,” a legal status that is essentially a license for investment banks to lie to them. If the banks misrepresented these loans, the pension funds, etc. can demand their money back. What terrible thing could the bank have lied about that would get them in trouble? Well, they might have told the buyer that they owned the mortgages when they didn’t have the actual documents of ownership. Whoops! One hundred billion dollars! That a lot of money.

Remember that phrase, “putback.”

James Pilant