Attention all state attorney generals — give the millions of underwater homeowners who have faithfully paid their mortgage over the years some relief!
An agreement has to be reached with the 50 state attorney generals and the big banks over the damages from the housing bubble. Negotiations on that front have been ongoing.
The banks, for their part, are willing to pay $25 billion, much of which will help underwater borrowers and those who defaulted on loans in the past few years.
Sounds good, right? But in the past 13 months, nothing has been agreed to. Instead, many state attorneys general are doing what politicians do best: Posturing while they demonize the "evil" banks.
Meanwhile, as this gamesmanship continues, struggling homeowners are not being granted relief. Both parties agree the banks have done wrong. But as part and parcel of the settlement, banks need to be given the immunity they need going forward — for the sake of the banking industry, which underpins the economy, immunity is required, or an open-ended liability will continue to depress this very important sector.
And if it's not resolved, homeowners will continue to suffer.
It's really time for the President and Congress to act on this front, crafting a bipartisan solution. Or at least set a deadline for the parties to agree, to force the issue.
The Obama Administration is supporting a settlement, but many fellow Democratic attorneys general continue to put so-called "justice" and their political interests over the millions of homeowners. If these states sued the banks, the legal process would take an extra four to seven years, which does nothing to help the borrowers who have been wronged.
This coming week, on Wednesday or Thursday specifically, comes a perfect time to pass this bill. It gives politicians cover, considering the holiday will help mute any firestorm from those who think the banks are "getting off easy" (something a certain segment will think no matter what amount of money in settlement is chosen).
What can't continue to happen is allowing the extremists in both parties to continue the delay. For the sake of political points, they are using anti-bank rhetoric as a steppingstone for their own interests.
What they don't seem to understand is that, when banks are facing such financial uncertainty, they will dial back lending more, putting a dangerous vise on the economy.
Did the banks behave perfectly? Of course not. They do deserve some scorn for what occurred regarding mortgages. But dragging out legal wrangling, and tying up money that could be being used for good in this convoluted process, is delaying relief that could buoy the overall housing market right now.
The aim of these negotiations from the beginning should have been about helping the distressed homeowners and letting the banks go back to doing what they do best — give loans to those who deserve them and need them. Instead, the 13-months (and counting) delay has been aobut the politicians who feel they need to stick it as hard as possible to the banks to show how "involved they are."
They want to be seen as "helping the little guy" against the "big, bad banks," but in reality they are really hurting that little guy they claim to care about so much. The government has unlimited resources to fight on (or so they act as if they do); but the average person trying to stay afloat in an underwater home isn't that lucky. They need help, and the sooner the better. State attorney generals — how does next week sound?
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