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Home Publications Blogs Beat the Press The White House KNOWS That a Foreclosure Moratorium Will Hurt Bank Profits, the NYT Doesn't Know What the White House Thinks

The White House KNOWS That a Foreclosure Moratorium Will Hurt Bank Profits, the NYT Doesn't Know What the White House Thinks

Monday, 18 October 2010 04:35

The mind readers at the NYT told readers that:

"The Obama administration has resisted calls for a more forceful response, worried that added pressure might spook the banks and hobble the broader economy [emphasis added]."

It is easy to see how a foreclosure moratorium might hurt bank profits. After all, the banks could be forced to follow the same laws on mortgages and property transfers as the rest of us. This would raise their costs and reduce their profits, which is why they had been taking short-cuts instead of following the law.

However it is not easy to see the chain of events whereby a foreclosure moratorium hurts the broader economy. Certainly Housing Secretary Shaun Donovan couldn't produce a credible story in the piece in the Huffington Post cited in this article.

Donovan uses the absurd story of a young woman who just bought a foreclosed property who he claims would have been unable to achieve her dream of homeownership if a foreclosure moratorium were in place.

Huh? Doesn't the housing secretary know that there is a huge inventory of foreclosed homes that banks are holding off the market waiting for better times? If the pipeline of newly foreclosed homes was temporarily stopped by a moratorium, this inventory would easily keep the market well-supplied with foreclosed properties for long into the future.

And, wasn't one of the main purposes of HAMP to slow the process of foreclosure? The argument was that this slowing was necessary to stabilize the market. Does the Obama administration want to slow or speed up the process of foreclosure, or both? And are both essential for the housing market?

This is what a reporter would be asking after seeing Secretary Donovan's piece. (Btw, yes both HAMP and blocking a foreclosure moratorium helps banks.)


Comments (9)Add Comment
About mind reading
written by John H. McCloskey, October 18, 2010 5:20
Dear Dr. Bones [1] ,

Your colleague Dr. Baker resorts to the ploy "But they can't REALLY read minds" about twice a week. Yet is it not likely that anybody who reads such upmarket _blogghiatura_ as his has been well aware of that fact for many years?

I believe we victims / patients / customers / consumers could do without the continual reminders.

As for the scribblers whom he pretends to be reminding, they'll actually give it up immediately after they stop abusing the word ‘irony’, which, as Mr. Mencken said -- IQFM -- of something else, will be "on the second Tuesday after the second Monday of November in the Year of Jubilee."

Do our Colleges of Journalism & Barber Science actually inculcate these nuisances?

Anyway, he is never going to run out of occasions to trot out this jeremiad, which is never going to produce the least bit of improvement, and in any case, I thought DB was an expert on macroeconomics or thereabouts, not the psychology of inferior scribblers?

Happy days.

[1] http://j.mp/6Kfyn1 (( IQFM = "I quote from memory." ))
written by izzatzo, October 18, 2010 7:00
Donovan uses the absurd story of a young woman who just bought a foreclosed property who he claims would have been unable to achieve her dream of homeownership if a foreclosure moratorium in place.

In a famous fable of Teabagger legacy on self sacrifice and honor as individual economic agents free from government, in times of danger from attack, single cell Teabagger Amoebas were known to congregate and form layers so other amoebas could crawl across their foreclosed bodies in order to escape socialist moratoriums.
written by scribbler, October 18, 2010 10:57
Doesn't the real point of the original post involve the parable of the woman buyer and the speed(s) of foreclosure? The mind-reading thing may be just his way of warming up to the subject or maybe he sincerely believes (naively maybe, but not ironically) that professional journalists should write to a professional standard.
written by fuller schmidt, October 18, 2010 12:04
I think Beat The Press is aimed at the logical fallacies in the news, John H. I know in Phil. 110 you couldn't tell the instructor "I don't need continual reminders" about mistakes in logic, so maybe that's the point.
written by Queen of Sheba, October 18, 2010 4:46
There is something seriously fraudulent going on here, and for sure journalists aren't asking the right questions. I suggest they don't know the right questions to ask.

The creation of MERS by the mortgage lending industry and then its being used to save some time and title filing costs has managed to bypass the title ownership of properties held in county recorders' offices all over the country. This presents much larger problems, far beyond foreclosing on a house on which payments are no longer being made. MERS is now listed as the mortgagee of record in counties across the U.S., although MERS exists only as an incorporated database that keeps track of the "owners" of sliced-and-diced mortgage tranches - a database that literally thousands of MERS "agents" can access. MERS doesn't own any mortgages, but foreclosures are being carried out in their name. The only way this can be legal is if congress passes legislation making it so, which will undoubtedly be one of the first items on the agenda after the election.

The history of land titles in this country is being wholly compromised, if not completely ignored, by allowing foreclosures to be carried out by any of the thousands of MERS "certifiying officers" (agents) who can't provide legal title to the mortgages held against those properties. By the way, you too can become a MERS officer by purchasing rights to its corporate seal for $25 through its website.

Something really ugly, if not downright evil, is afoot here. It's much more than just a "notarization" problem, even though that's how it's being portrayed by journalists who don't ask the right questions.
written by BOXER, October 18, 2010 6:36
The right need not worry about socialism, the gov has gone totaly fascist by choosing to meld with banks, wallstreet and the military industrial complex over the people. Socialism is only for the rich and powerful, via la revolucion!
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Foreclosures on homes
written by Jehnavi, October 22, 2010 3:03
he whole system was just so absurdly inflexible that there was no stopping a foreclosure process once started. The problems that plagued the process were more than a few document pushers that just forged documents or failed to review foreclosures as per norms either.
Foreclosures on homes
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.