In Monday’s The New York Times editorial The Fed and Foreclosures, The Times finally took the Fed to task. They wrote: “There are two sides to every delinquent loan – a lender who made a bad lending decision and a borrower who cannot repay. Yet banks have never acted as if they bear any responsibility for the mortgage mess.” The harsh reality is banks take little to no responsibility for the fraud-closure mortgage nightmare.
According to The New York Times editorial, the Federal Reserve has proposed a rule that would disable one of the more effective legal tools that borrowers have to fight foreclosures.
The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures. The Fed’s proposal would change all that.
But the bigger question is why would the Fed even get involved with this hot potato? Isn’t the Fed a non-partisan – above the politics – holier-than-thou institution that keeps the economy humming and rocking? Aren’t they the ones with the ability to print money and inject it into the economy as they have the ability to suck money out of circulation when things get too heated? Aren’t they the ones that paid 100 cents on the dollar for underwater virtually worthless sub-prime mortgage bonds under the ruse that the funds paid for the bonds was the fastest way to get money into the economy?
So… why is the Fed so concerned about a homeowners right of rescission when the banks were originally the ones who over stepped their bounds? The answer is pure and simple! The Fed is a wolf in sheep’s clothing. They are not concerned about you and me. They are there to protect their own turf. They are there to protect the big banks and Wall Street interests.
The Fed is concerned that if the consumer truly begins to catch on that their statutory and constitutional rights have been abridged on a systematic basis, many banks would likely no longer pass the very financial stress tests that the Fed put in place to ensure that the economy dos not collapse. How ironic. Set up new tests and then bend the rules so that the banks can continue to cheat the system.
The Fed siding with the banks over the consumers is not new. Why is it that every government program to help homeowners has failed to date? First it was going to be a cram -down provision change in the bankruptcy code, then wide-spread modifications, then under-water refis! None of these proposals have worked and won’t work because the Fed has been too concerned with consumers taking matters into their own hands. Until now I had only surmised that that was what was going on… but this time the Fed went too far by openly letting us all know where they truly stand.
The New York Times says it best:
The Fed failed to protect consumers before the financial crisis, and is failing again.
I think it’s a shame that a well scholared man like Ben Bernanke who is the utmost expert on how the government re-stimulated the economy during the Depression could have become so co-opted. I have four words for Mr. Bernanke:
DO YOUR JOB BEN!
From the Trenches,