Claire Hill and Prentiss Cox: Help banks, one last time, and help us all

  • Article by: CLAIRE HILL and PRENTISS COX
  • Updated: December 4, 2010 - 7:16 PM

How to clear the way for both foreclosures and loan modifications.

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suziqwhoDec. 4, 1010:23 PM

Seriously? Why would anyone pay money to a mortgagor that can't prove they own the loan? What, they pay and then the "right" one comes along and they pay again?? A borrower has to sign many times in a binding agreement when they make a substantial purchase such as a home. Those terms are enforceable, yes. But when the loan gets sold and resold the lender should be equally accountable to any terms of the contract between the parties. The legal aspect of these contracts should be no less enforceable to the lender as it is to the borrower. I don't see why the standards should be different for the lenders/loan purchasers when they become careless and do not adequately account for all legal contracts. Why should they get away with such disregard to the contract they are bound to?

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my4centsDec. 4, 1011:54 PM

This "emergency" that needs government help is just like the robo-signing hype - the stated problem is basically nonexistent. No way should we bail out the banks again while looking for more regulation. Let banks (and mortgagees) fail if they can't make it. Let the markets correct as they should. Some businesses and individuals have made bad decisions - now let them pay the price for those decisions and move on.

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jim4848Dec. 5, 10 3:54 AM

If the banks don't need the paper work to foreclose, I wonder if I could foreclose on the banks property.

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rockanatreeDec. 5, 10 7:20 AM

This is a funny article. Bail out the same banks AGAIN that screwed all those homeowners. Very funny.

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janders50Dec. 5, 10 8:22 AM

to me this article with all its "solutions" is a lot of static buzz designed to sugarcoat the message that there has been a whole lot of unprofessional financial activity going on and it is incumbent upon "us" to once again attempt to make it whole. well, this time let us allow the chips to fall where they may rather than damage our financial credibility further. they are really trying to say that if we do not follow their advice these practices will simply continue without reform-i for one don't believe it.

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kkrugerudDec. 5, 1012:16 PM

"Let's {not] bail the banks out of their self-inflicted wounds one more time". Reason be: the banks never seem to learn; the executives never seem to get it; they have had their chances many-a-fold - they'll just do there crooked schemes anew. Question: where is the bail out for all those suffering in deep debt?

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taffy101Dec. 6, 10 8:21 AM

Speciality courts!! our courts robo-sign orders, submitted by lawyers who are not trained in anything but rules and procedures, not in finance or economics, family speciality courts in Hennepin County are inept and decisions are now made by financial experts and child specialists, (only a few people are in this program), are judges are mostly prosecutors, they are experts in traffic tickets; you can have any undergraduate degree to apply to law school

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suiDec. 6, 10 5:08 PM

Bailouts for crooked lenders? How about JAIL TIME? With helpful suggestions like these, afflicted home-owners don't need enemies. You've made me sick in my soul. I say again, I'm sickened--but not at all surprised.

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nobsmnDec. 9, 10 8:36 AM

The Star Tribune didn't publish my detailed Counterpoint article, surprise surprise. I will post it in parts below, and it can be read here: http://economicdeathrattle.blogspot.com/2010/12/dont-bail-out-banks-one-last-time.html Part 1: The Opinion page article “Help banks, one last time, and help us all,” by Claire Hill and Prentiss Cox, was inaccurate and one-sided. It was particularly disappointing to see something so full of factual errors and unjust policy prescriptions coming from University of Minnesota Law School professors. The purpose of their proposals is to save the banks from their own sins “one last time,’ in order to “help us all.” One of the most trotted-out yet false assertions throughout the financial crises of the past two years has been that we cannot afford let “too-big-to-fail” banks go bankrupt. The function of banks is to channel society’s savings into productive investments. A family may need a loan to purchase a house. The loan must be paid back with interest, or the bank can foreclose to recoup the investment. This capital formation function could be accomplished by new banks, seeded with public funds if necessary, if the big banks go bankrupt due to their bad decisions and fraudulent behavior. Do we really want to continue to reward bad business models and criminally negligent CEO’s because of the false notion that they are necessary? Besides the fact that this undermines the very basis of capitalism, the real reason the big banks are being propped up is because of their political influence, purchased through lobbying and campaign donations.

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nobsmnDec. 9, 10 8:37 AM

Part 2: The authors of the essay used the euphemism “cut corners” to describe the actions of the big banks. Is the mass production of forged documents really just “cutting corners?” If you or I show up in court with forged documents, we end up with a perjury charge and probably wind up in jail. The banks get a “do over” until they get it right, it seems. The fraud goes much farther than the “robo-signing” controversy. There was serious fraud at every stage of the housing crisis, from the origination of “liar-loans” and sub-prime mortgages, to the way mortgages were bundled into mortgage-backed securities (MBS). Borrowers have been swindled. Investors in MBS have been swindled because the loans did not meet the underwriting standards claimed by the banks. Furthermore, the promissory notes seem not to have been conveyed to the trusts that were supposed to administer many MBS securities. These facts are starting to be revealed in the mainstream press and in congressional hearings. In light of this, Hill and Cox propose “one last” bailout. Does anyone really believe that this “one last” bailout will be the last? The greatest risk of all is to the rule of law upon which society depends. How long will the average person go along with a system in which banks get away with fraud and perjury, or at most get a wrist-slap, while the average person is forced to abide by every statute? A two-tier justice system will lead to a loss of respect for the law in general. Such a system is eerily similar to the one that existed in France prior to their revolution.

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