In the USA, there was a time when manufacturing owned the USA. From the 1950's through 70's, it is clear that manufacturing and local industry ruled politics. Remember when tobacco was given by doctors as a sedative to calm nerves? Even when tobacco was becoming regarded as a health threat, it took decades to get tobacco labeled with a warning. This is no accident. Many US states where funded by the tobacco industry and resisted any changes that would adversely affect it.
For various reasons, the US manufacturing base evaporated, that can be a topic of a different, long winded post. Between the 80's and today, it is clear the largest influence on American politics is the financial industry.
To prove a point, lets take a look at last week. If you haven't heard already, it has been exposed that banks have not been keeping legal documents on the housing it owns, for a wide variety of reasons. One theorized reason is such documents, if produced, could be used to prosecute banks for fraudulent loan practices.
In any event, the problem has been dubbed MortgageGate.
The solution should be straight forward, enforce the law. The banks knew the law, and had to track houses worth upwards of millions of dollars with proper documentation, just like me and you must. Therefore, a bank should not be allowed to foreclose on a home without producing proper documentation.
In the absence of proper documents, the process should be the same, as if you lost your home ownership paperwork, and had to re-establish ownership. States across the country are finally taking notice, and stopping the foreclosure process in light of the lack of law process.
How SAD is it, that none of these states enforced the law, until this came to light through internet media and small media outlets.
Mortgage Gate Reaction by US government
The US congress and senate passed by a VOICE vote a new law HR 3808 called the Interstate Recognition of Notarizations Act of 2010 that would in effect, absolve banks from having proper legal documents to foreclose on any real estate. This act was waiting for President Obama's signature, when Mortgage Gate exploded across the internet. Thankfully, the exposure of the government altering legal process and excempt banks from following it, applied enough pressure for Obama to not sign the bill.
NOTICE, President Obama did not VETO the bill either! By not vetoing, there is room to come back at this after the mid term elections. Further, President Obama is against states halting foreclosure processes to review gaps in the legal process.
As for halting the foreclosure process, I for one believe this actually benefits the banks. By not allowing foreclosures to proceed, banks many continue to record the bad loans at full value, and not realize losses until the foreclosure completes. In a strange way, I think the banks wanted foreclosure gate, as an option to stop the realization of losses. But I digress.
Now that the US government failed to pass laws to make it easier for banks to foreclose without documentation, Mr. Ben Bernanke of the Federal Reserve Bank is chiming in.
As a member of a private institution, and not part of the federal government, frankly I don't see how the Fed has any standing to weigh in on this problem. Further the Fed is part of the private banking system, screaming conflict of interest.
Mr. Bernanke is starting the news engine to set the stage to rework the process, in what I imagine will be in favor of the banks. Let me be clear. The US congress can be the only entity to pass federal laws and to spend US taxpayer money according the US constitution. As previously documented on this blog, the Fed has in fact, spent US taxpayer money by backing non-federally backed bad debt notes. Now I am waiting to see how the Fed can rework the foreclosure process for bank benefit, without having the power to pass laws. I expect the spin will be a "banking process clarification", or something to that effect.
Is US Government is Owned by the Banks ?
Consider what you just read. The US congress and senate passed a law to allow the banks to foreclose without required legal documents EN MASSE, in a manner that has no record of who voted for the bill. This to me indicates the congress knew this law was just plain wrong act on their part.
By the grace of the internet and getting the word out about this law's imminent passage, President Obama did not sign into law.
The US government has taken on TRILLIONS of dollars in bank debt, and made it the problem of the US people. Further, the US government has not enforced law process in either creation of mortgages, or foreclosing on those same properties.
Further, banks are allowed to have a "special" accounting standard that in effect, allows the bank debts to not be valued using the common practice of "book value", but rather stated value. This change was enacted as an emergency measurement over a year ago, and still remains today.
There are many reasons why above is being supported by the US government.
The likely answer is lawmakers answer with "what they know" which is, changing laws. They are member of legislative and not judicial branch. As such, the politicians easier answer is to change laws, rather than get aggressive and apply pressure on the judicial branch.. I am not excusing the lawmakers actions, but rather explaining human nature is try to take the quickest, least effort, way to resolve a problem.
The other possible answer is lawmakers are "owned by the banks", and beholden to the money driving the US.
Either way, it isn't good for the common persons bottom line.