Misdirection

While the Department of Justice announced today that it will investigate the foreclosure practices of some of the big residential mortgage loan servicers arising from their alleged "robo-signing" of documents that were not actually reviewed by the person signatory, Housing Wire publisher Paul Jackson asks a critical question: So what?

But in the end, am I the only one asking: who really cares? Does any of this make it more likely that a borrower will suddenly be able to afford their mortgage? Isn't that what really matters?

What really should matter is this: as a nation, we have lost at least $2 trillion in wealth thanks to the economic downturn, led by an absolute collapse of our housing and mortgage markets. It’s a collapse we have all yet to recover from, as a host of well-intentioned but ill-fated policies have done nothing except prolong pain — not only for banks, who are still playing hide-and-seek with bad assets on their balance sheets, but also for borrowers, who are being lied to by our government and by the very consumer advocates who claim to wish to help them.

Read the whole rant. You'll be glad you did (assuming you're a banker and not a bank-hater).

Of course, our fearless leaders in Congress understand that at a juncture where many community banks are under the gun from so many directions, the economy is wallowing in the doldrums, and joblessness continues to impede a recovery, what one of this country's top priorities has got to be is the expansion of the Community Reinvestment Act and the toughening of its standards (paid subscription required).

House Financial Services Committee Democratic leaders introduced a bill [September 29, 2020] to expand the Community Reinvestment Act and impose stricter standards on banks.

The bill from Rep. Luis Gutierrez would make it tougher for banks to receive an "outstanding" rating on their CRA exams, add a new "sufficient" rating and require bank affiliates and subsidiaries to be included in evaluations.

"This is an important first step on the road to reforming and modernizing the CRA to better meets the needs of our communities and address the new financial marketplace," said the Illinois Democrat in a press release. "We are laying the groundwork for next year, identifying priorities, and evaluating what we have been able to fix and what remains to be fixed in our financial markets."

Yep, no doubt about it: you've got your "priorities" straight, Luis.