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Up more about this this robo signing mess -- -- -- with -- right now from the editorial board -- Wall Street Journal.
Isn't -- like a serious moral hazard issue here.
Yeah of course Susan moral hazard here just bottom my mind out well first of all I think about the -- the Genesis of this so called scandal.
There has never been any evidence that anyone was kicked out of -- home.
Who was current on their mortgage so the whole premise of the whole -- and all these negotiations is based on false premise.
So you have the administration using that as an excuse to go to the banks to say.
And in the squeeze it is much money as I possibly can and in between it's hit -- to 25 billion dollar -- got a the 25 billion dollar number quick before you comment I don't think it -- happen because because the banks are basically.
Under an enormous amount of political pressure.
They want the lawsuits to stop they are beholden to their shareholders.
So they're doing the best that they can to limit the damage to their shareholders again who were bank shareholders.
There you -- me and mom and dad -- your friend on the street.
So the banks say you know what.
We know that they're gonna punish us we just need to mitigate and -- that punishment as much as we possibly can't.
But this settlement today.
Only a small portion of the settlement goes to address this pseudo scandal remembered the rest money is going to people.
-- there's money going to people who are underwater on their mortgages and not paying.
By the way 40% of those people have been not paying for two years or more so they're living for free and they're getting rewarded.
You have payments to people who were under water and paying so they just bought more house than they could afford but the government's -- -- reward them for that.
And many of payments going to people who were foreclosed on.
And governments say how well that's that's too bad year for clothes on please us some cash it's basically -- a money transfer from bank shareholders.
To these people well and also by the way they're saying people who've lost their jobs -- can't afford their how many more.
Well that's OK you don't have to pay so this is fundamental he is I think seems to be thought of in a broader context is fundamental.
Of or -- rethinking of how our housing market should work the admit this is one piece of the administration's strategy to basically say you know what.
Economic incentives in the housing market -- -- we don't -- everybody should have a home housing should be a right.
And you know what we'll -- banks will -- shareholders will squeeze mortgage backed security investors.
To achieve that goal that's the bigger picture of what's going continuity so -- about this is that business that in doing it right and -- yeah script invited do right now get so that nothing could do nothing yeah listen let me give decent Levy some numbers from core logic.
Their last figures available the end of the third quarter.
Said that there -- ten point seven million underwater borrowers and America.
That's so -- between 60700.
Billion dollars okay break so do you think that cool 600 -- billion dollars of underwater loans.
In the administration stood up today and said.
We're gonna take money from bank shareholders and from investors twenty billion and that's gonna happen appreciable impact on how I think that's the bigger joke right this is gonna do -- -- -- assassinate you gonna nationalize the housing market let's just do it let's nationalize the housing market.
But they know that they can't say that.
-- ultimately all this will do -- delay the recovery.
They've had umpteen initiatives to stop foreclosures to impede the market from clearing this is just another one this is -- -- prolong the pain prolong the litigation.
Banks are now -- the tobacco companies of today they're the big targets that's a great announcing.
The only saving -- I would think is -- if you are bank shareholder you're shareholder of any of these companies I would think -- thanks -- -- reserving for this edition not be hit to earnings at the end of the -- well look there's no guarantee you they're not gonna see litigation fact in the press conference today.
-- -- the attorney -- -- -- so well you know we still soon for referred for criminal activities to states can still -- all and by the way.
We still see them under civil rights.
Claims -- what does that mean.
That means that the Department of Justice is gonna continue to go after banks for not lending to minorities.
And other local -- right.
That that's what that line -- in the press conference today is that means they're gonna keep forcing banks to loan to people who can afford mortgages so you're saying -- do a lot -- reserve line item could very well be underfunded sure.
OK so now.
Why don't the banks fight back.
Why can't why haven't banks said -- you know I think you court because this is -- we don't deserve this yeah well the big banks can of can and can't think they can't afford it.
That's an open question.
I think many of them are are under such intense political pressure and not just from.
Okay this robo -- negotiation you also at today's press conference at the Consumer Financial Protection Bureau chief.
Richard quarter -- standing there and Richard court today.
It is going to be able to regulate every single financial product that those banks offer so -- look at -- that you're saying I really soon.
These guys in in in say what they're doing is wrong because.
What is they don't let me offer that really lucrative new innovative products is that the -- and -- -- however regulation but some regulation on you and by the way.
Think of all this new cooperation between the -- in the state attorneys general which was also evident in today's announcement.
They don't just have to worry about the feds suing them they'll have fifty stage he's Republican and democratic to worry about it's a huge.
Liabilities of their hands are tied basically pretty much -- What -- why the consistent demonization of these banks because -- because it's politically easy to do it's an election year and they can't talk the administration cannot talk about the the economy in their record.
So they have to find something else to talk about.
And they can point -- this -- say C homeowners.
This is quote unquote free.
Forget about investors forget about bank shareholders this is free and we're out there to help to help -- it's it's pure populism but it's ultimately.
It's ultimately very very destructive to the housing market but it's especially destructive to the -- And and the minorities at the administration purports to help because it's only going to -- to take.
But real risk and credit considerations out of the of the equation when banks make loans and that that can only hurt.
Of the neediest in our society and this goes to think that the bigger bigger economic picture I am sure you saw The Heritage Foundation put out of -- or.
The amount of people dependent on federal handouts growing by the second grade Humana people actually paying federal taxes is falling I think they said 49 point 5% of people who file federal income tax is now don't pay that's right so we're handing -- -- -- -- taking less in.
-- you know we're supporting the housing market -- supporting our almost 50% of our people.
It's it's a very scary move to social it's almost it's the same idea is a health care mandate it is housing as a right.
Economic incentives don't play into it we say we want the private sector to come back but we're not gonna let it come back we're just we're just going to keep interfering in the market.
And we're gonna keep expanding government's role that is the bigger picture of what's going on here.
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