NEW RULES AND OLD RULES

EDITOR’S NOTE: Today’s editorial in the New York Times mirrors the outlook of most Americans. It’s time to pass some new rules. I agree but I think that puts the emphasis on the wrong place. Most of these “new rules” were already in the old rules. They were not enforced. So the first new rule I would propose is “let’s enforce the old rules.”

While the writer of the opinion acknowledges that it has become fashionable to blame the borrowers, there is not one word of why and how that is simply not an adequate explanation for the mortgage mess, nor does it give us a proper starting point for correcting it.

Here is why we got into this mess: borrowers and investors who advanced the funds for the borrowers to borrow were fooled by clickety-clack quant language and assurances about “this is standard”, and other meaningless phrases. The result was that they relied upon the persons who were offering them a financial product that actually had a negative value. Nearly all borrowers and nearly all investors who participated were genuinely fooled. It was the equivalent of a business calling itself a bank taking deposits and then not giving it back. It was the equivalent of selling a poison pill as a natural herb supplement.

It was fraud that got us into this mess and it is prosecution of fraud that will get us out. Anything else, any other way of looking at it, merely compounds the record title problems that will soon explode in our faces, the economic problems that can’t go away unless they are actually addressed (as opposed to “dressed” in nice clothes).

Any Judge who allows another one to slip by thus giving a free house to a snickering lawyer and his client who has the name “Bank” is compounding problems that are already projected to last for more than three decades.

Any lawyer who fails to object to a proffer of evidence without the real evidence being required is aiding and abetting the enemy. They were lying when they started this and they are lying now.

This wasn’t an event. Is was and remains an on-going process of fraudulent transfers and shell games building on an already successful ponzi scheme that has never been taken down.

August 22, 2010 New York Times

Now, the Rules

The new financial regulatory reform is supposed to curb the predatory lending practices that led to the collapse of the mortgage market and have put millions of Americans at risk of losing their homes.

The Federal Reserve must now translate the legislative language into rules that will govern how brokers, lenders, appraisers and investors behave from now on. Given the Fed’s long history of putting the financial industry first and consumer protection second, Congress will need to keep a close eye on the rule-making process.

It has become fashionable to blame profligate borrowers for the calamity. And there is no question that in the madness of the housing bubble, some people should never have sought mortgages or bought homes they clearly couldn’t afford. But the crisis was driven by Wall Street’s hunger for quick profits and its eagerness to buy mortgages and package them into securities. Banks, mortgage companies, brokers and appraisers all conspired to steer borrowers into loans with escalating interest rates, balloon payments and other conditions that made them highly prone to default.

The new law does not ban risky loans outright. It does establish several conditions that, if correctly implemented, should discourage lenders from issuing them.

Lenders must now take the common-sense precaution of documenting the borrower’s ability to pay. They can no longer penalize borrowers — eager to free themselves from subprime or other risky mortgages — for paying off the loans early. And lenders are forbidden to pay kickbacks — “yield spread premiums” — to brokers who push borrowers into costly, higher-interest loans.

If loans violate the law, borrowers will be able to stop a foreclosure and sue to recover damages. The risk of being hauled into court should persuade investors to look closer at the underlying loans to make sure that they conform with federal law.

These are all good, and desperately needed, reforms. Industry lobbyists, who do some of their best work in the rule-making phase, will work hard to water them down.

Consumer advocates are especially worried about how the Fed will formulate the rules that are supposed to stop lenders from steering creditworthy minority or female applicants into more expensive mortgages and end “wealth stripping,” under which lenders design loans that quickly rob homeowners of their equity.

Congressional leaders believe that the Fed was chastened by the crisis and will now do all that is needed to protect lenders. Given the agency’s long history of kowtowing to the banks, mortgage lenders and credit card companies, Congress will need to do more than trust. It will have to verify that the new rules finally give consumers — and the American economy — the strong, permanent protections they need.

6 Responses

  1. E petiton set it up Neil we can pass it on And on and on until our voices become loud enough that it cannot be pushed aside or run over

  2. COMINGLING OF FUNDS SHOULD BE ARE GOAL IN MY OPINION. WE MUST FIND ONE OR TWO ISSUES AND GO FOR IT. NOT TO CONFUSE THE JUDGE OR THE JURY.

    WE MUST EDUCATE THE PUBLIC IN GENERAL. THAT IS WHY WE NEED A BOOK ALA DUMMIES,

    THIS IS MY OPINION ONLY AND I AM NOT AN ATTORNEY BUT A PAWN IN THE GAME CALLED LIFE.

    OH JUDGES OF AMERICA
    LET MY PEOPLE GO.

  3. THE AMERICAN HOUSING GENOCIDE HOLOCAUST.

    NEIL GARFIELD AND COMPANY + CITY OF BELL CASE STUDY.

    I agree a 100% we need a Discovery questionaire and the attorneys can do it. We need to also gete Neils point across for Dummies SO WE CAN ALL PREACH IT TO OUR NEIGHBORS. WE NEED TO GET THE PEOPLE ON OUR SIDE. EDUCATE THE PEOPLE WHO ARE STILL PAYING THAT THEY ARE SUCKERS.

    But in my opinion to get the point across we need to do it at the City level and county Level. The City Attorney Sherriff Mayor City counsel ordinances limiting the activity of the banksters.

    TO THE JUDGES PLEASE WAKE UP AND LET MY PEOPLE GO.

  4. Seek the truth. Everything else is only an illusion.
    Strength and Honor !

  5. Wall Street and their gang of banksters must be shut down. The ony way to do this is to Be a Patriot ! Every one STOP your mortage payment.. This is the only way to teach these S.O.B’s a lesson.

  6. Now here is something POSITIVE THIS BLOG CAN DO! Lets have several lawyers put together comments that should be part of the rules and have us sign a petition asking that they be considered. that way our voices can be heard. We have the experience of being in the trenches and there is nought stuff we have accumulated to know what should NOT be done. If that can be incorporated into new rules then we have done something positive and this blog has been worth it

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