FRONT PAGE CONTRIBUTOR
‘Wear a wire.’
That’s Glenn Reynolds’ advice to anybody who feels obligated to attend a joint Treasury/HUD meeting called for July 28th to address the mortgage crisis. Given that the letter that was sent out is only ‘requesting’ attendance by the most charitable of interpretations (when two Cabinet Secretaries send you a letter about your presence at a meeting, you’re expected to show up), that should be pretty much the top mortgage servicers.
To summarize the article [with my own comments in brackets], the situation is this:
- Foreclosures are rising. [Big surprise: we've been using political considerations to dictate the percentage of home ownership for decades now. Thanks, Democrats!]
- The government wants the mortgage industry to renegotiate more loans so that foreclosures don’t rise. [Paying them a thousand dollars per renegotiation doesn't seem to help much.]
- The mortgage industry isn’t really capable of handling the strain. [A thousand dollars apparently won't pay for it.]
- It’s also not a trivial exercise to renegotiate each loan. [Mostly because the mortgage industry has to research all the details that they didn't research the first time, because we've been using political considerations to dictate the percentage of home ownership for decades now. Again, thanks, Democrats!]
- All that being said, the New York Times would rather blame the mortgage industry for realizing that half of renegotiated loans default anyway, a non-trivial percentage of potential defaulters will self-cure without intervention, and that renegotiated loans hurt a balance sheet. [This is an economy where banks that didn't take TARP money brag about it in their advertising, which might suggest that the last point is kind of important.]
- So the government is probably going to start pressuring the mortgage industry the way that it did the banks last year. [The New York Times thinks this is wonderful, of course.]
Yeah. Those representatives that show up for the meeting had best wear a wire. Because this lead-in passage from the NYT article?
Remember that infamous meeting last October at the Treasury Department, the one where then-Secretary Henry Paulson locked the chief executives of the nation’s nine largest financial institutions in a room, and wouldn’t let them out until they agreed to accept billions of dollars in government bailout money — whether they wanted it or not?
O.K., that’s a bit of an exaggeration.
No. It’s not. So not having a permanent record of what’s going to be said seems contraindicated.
Crossposted to Moe Lane.