Time to Finally Finish Off The Banks? New Treasury Idea Gives Hope to Haitian-Style Takeover Of America

February 28, 2010
By John

Administration Proposes Ban on Foreclosures

In what could prove to be most destructive proposal yet floated by our friends in Washington – and it’s tough to reach that level of fecklessness in a parade that includes floats submitted by ObamaCare; Cap & Trade; Stimulus I, II and III; Sotomayor; Bond holder rip-offs at GM and Chrysler; the AIG takeover and bonus program; Senator Dodd’s bank bill; TARP and so many more bad ideas that my blood pressure won’t let me regurgitate them at this late hour – the Administration is reportedly considering inserting the federal bureaucracy directly between defaulted residential borrowers and the lenders who financed their homes.   According to a story on Bloomberg Thursday February 25th, a Treasury proposal would “prohibits (sic) referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.”

"This is the Way We Spend Their Dough, Spend Their Dough..."

In other words, the Treasury Department is considering forcing secured mortgage lenders to go through yet another gauntlet before being allowed to pursue a court-supervised foreclosure proceeding.  It means a bureaucracy that didn’t notice the banking system was about to collapse will need to staff up to manage millions of upcoming home defaults.  Yes, these lucky few regulators will get to play God with depositor money, neighborhood home values, and violate of centuries of established real estate and contract law through fiat and whimsy.  It means additional months of delay in resolving real estate defaults, in more vandalism, and ultimately further slippage into a Detroit-like state of neighborhood failure and decay in many parts of America.  It means that the disposition of defaulted home loans and the associated properties would become a direct extension of the federal leviathan.  And the Rough Truth is that this would spell the end of private home lending and imperil all new home ownership for a generation.

Is there a Squatter in Your Future?

I understand the tremendous personal embarrassment and pain that defaulted borrowers must feel – losing a home is a devastating event.  But stalling foreclosure for political reasons and forcing bank write-downs by bureaucratic fiat has no upside to the borrower or to society.  Neighboring homeowners will see their property values fall further as homes remain empty or occupied by squatters who have no incentive to care for the property.  Investors will see their ability to recover their investments impaired and collateral lose value, and hence will withdraw from the market.  Defaulted borrowers will buy a few more months of occupancy in a property they already lost – and either delay getting on with their lives or become squatters.  And let’s not forget that more forced write-downs would further damage a wounded banking sector, or force depleted taxpayers to step in and make up the shortfalls of politically favored borrowers.  Worse yet for society, investors in any security will learn to refuse to lend at all without an explicit governmental guarantee– making everyone beholden to/victims of a de facto government run banking system.

Are they clueless, or just completely mad?  Or maybe this is what they want.

Speaking Truth to Power: Disaster Awaits

Well, this would certainly fulfill the wishes of that famous Detroit woman waiting in line for  “Obama Money last year.  It would set the government squarely in the middle of every foreclosure decision in America.  It would make the President’s cronies the arbiters of desperation for every failed borrower.  It would make every decision subject to the ‘fairness’ determinations of the politically connected, the media and their friends.  It would draw Congressmen like drunks to a no-host beer bust – demanding favors for their friends and picking fights with those who would deny them another round.   And it would push us toward becoming a squatter nation.  This is what you have when property rights cease to exist.   I guess destroying GM’s bondholders wasn’t enough – we now have to destroy the banks and MBS investors all around the world on the way to a transformed America.

Why would any democratically elected government want to take that kind of heat?  How can they pick winners and losers on every block in America, and expect to come out ahead?  Are they so lost in the dubious morality of victim-hood that they cannot see how the destruction of property rights lays waste to social order and decency?  Unless of course their goal is to transform America into a Haiti-like haven for the indigent – and make every contract, loan and piece of property subject to the whims of the elite or the armed.  Or they’re just plain stupid.

Fortress Treasury Department: New Bank of US?

Unfortunately the genie is out of the bottle on this one, and it is public knowledge that our leaders are seriously considering it.   And by the very act of floating this foolish idea, they have surely rattled investors and the mortgage market, given false comfort to those in default, ensured that economic recovery will be even more difficult than it already was, and made it more likely that we’ll soon be looking at a new ‘Bank of the United States’– one that will be created in the wake of a new debt ‘crisis’ – one given birth by our leaders’ fecklessness, arrogance and ignorance.

Other Than That, How Was the Play America?

The only things that may stop them from doing this kind of thing are (1) a couple of election cycles that sweep all of these juvenile lunatics from power quickly and overwhelmingly, and (2) the imminent collapse of our borrowing power (i.e., the dollar) as a nation.  Of course, if the latter happens it’s not clear what anything will be worth – from sea to shining sea we’ll be in chaos.  So maybe they’d like that, too.   It would surely help ‘spread the wealth around a little’, right?

If I sound upset today – it’s because our federal government has gone rogue and is led by a cadre of useful idiots who will drag our nation over a cliff if they are given the time.  And time is running out.

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One Response to “ Time to Finally Finish Off The Banks? New Treasury Idea Gives Hope to Haitian-Style Takeover Of America ”

  1. JoJoTo4 on March 1, 2010 at 8:58 am

    It sounds more and more like congress is a bunch of bubble people. They can’t get an infection from the common man, while we pay for all their expenses. Now their rolling down a hill (debt, healthcare, foreclosures, unemployment and the hits keep coming) with arms flailing screaming Weeeeeeeeeeeeee. It would be funny except none of this seems to bother them. There in their own little bubble of ignorance. Their all out of touch, because they have had it easy for so long and now that something has to be done they just can’t see out of the bubble. All of their decisions seem to be what’s best for themselves and not the common good. They need a little dose of reality and I hope it doesn’t come to late because there will be nothing left to govern. Thanks again JM.

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