Banks Manipulating Housing Prices

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Editor’s Note: Buyers Beware! The Banks are manipulating housing prices like the Arabs manipulate oil prices. When it suits them the prices go up and down depending upon whether they let the flow of empty houses flood the market or they hold back.

When we think about the tens of thousands of homes that were forced into foreclosure after so many of the homeowners requested a modification payment that they could meet, it isn’t hard to come to the conclusion that the banks are not interested in preserving housing prices, they are interested in foreclosures and making the housing prices bottom out far below market forces would allow. They have cornered the market on housing and they are using it the same way they cornered the market on money.

If you’re are thinking that this is all conspiracy theory answer this: “why were tens of thousands of homes bulldozed in Cleveland, Detroit, Indianapolis and other cities when many of the homeowners had submitted modifications proposals? The servicers and banks had a duty to “consider” those proposals which is to say they had a duty to accept the proposals if they made sense. They didn’t consider the proposals. They pretended to consider the proposals. So the pretender lenders are at it again.

They want the foreclosures because they want the foreclosure deed. That deed is evidence of the fact and carried a presumption of validity that the credit bid was valid, the beneficiary or mortgagee was properly identified and that the amount due was correctly stated. None of those things are true in most cases. Why law enforcement is not grasping this simple fact begs a political question in an election year.

Wall Street is now forming partnerships and other vehicles by which they are pooling their money and buying the homes at the rock bottom prices that they are creating.

They can do so with full confidence that the market will not go up until they want it to do so, based on their control of the housing supply (defined as houses for sale).

Why are we letting the banks take us for another ride? And while I am at it, why are we not holding candidates feet to the fire on the new Dodd-Frank Law and the regulations for the Federal Consumer Financial Protection Board?

The arguments against implementing proper regulations are completely discredited by the mortgage meltdown and the historical similarities with the great depression.

If you take the referees of the field, the players are going to make up the rules as they go around. The clearinghouses that were supposed to be transparent transactions and exchanges are now all but dead as the banks have created “innovative” ways to avoid them. The referees should step in and put some teeth behind the bite of Dodd-Frank.

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Elizabeth Warren is the One to Appoint

Here are some things we can all agree on regardless of our position on the appointment. Let’s look at the attributes of this candidate for the job of heading the Bureau of Consumer  Financial Protection:

  • SMART (HARVARD)
  • CREDIBLE
  • WELL-INFORMED
  • EXPERIENCED
  • DEVOTED TO HER DUTIES (CONGRESSIONAL OVERSIGHT COMMITTEE CHAIRMAN)
  • STUDIOUS
  • THOUGHTFUL
  • CAPITALIST IDEOLOGY (BLAMES PEOPLE NOT THE SYSTEM)
  • PATRIOTIC (CONCERN FOR NATION AND CITIZENS)
  • PASSION FOR THE JOB

There are other attributes as well that even the most conservative people would agree with. So why is there opposition? ANSWER: Ideology.

Because there are people who fear big government there are politicians willing to pander to those people as though THAT was the issue. It isn’t. The legislation has passed. The law exists. The Bureau has been created.

The question is not whether we should have a government solution. The question is who should be the the leader of the institution created by congress to handle the consumer side of the financial system.

Why wouldn’t you want a person with the attributes listed above to be the one to be in charge of the Bureau? What is in it for you to see someone with fewer attributes or less conviction about their job in protecting consumers from convoluted schemes emanating from Wall Street? Do you really think that the country would be better off if the appointment goes to someone who is less suited for the job?

The controversy here is not between reasonable people. It is between established people on Wall Street and the rest of the nation.

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