Good morning. Here’s what I’ve seen so far: the futility of foreclosure prevention and the bank tax, making the most of disaster donations, and Wall Street bonuses are indeed back to pre-crisis levels.
Foreclosure prevention simply isn’t working (Huffington Post)
For the few homeowners that are helped, the relief comes with a cost: unpaid balances typically rise.
“More troubling, more than 70 percent of modifications result in an increase in the principal amount owed,” according to the report by the State Foreclosure Prevention Working Group, a collection of 12 state attorneys general and three state banking supervisors (underlined in the original). This occurs because modification programs typically allow for mortgage companies to tack on delinquent amounts and any fees incurred by servicing to the mortgage principal. The Obama administration’s signature effort, the Home Affordable Modification Program, allows for this, too.
Obama’s liabilities tax, if it passes congress, is a case of “close but no cigar”. The tax correctly identifies leverage as one of the major problems with Wall Street’s current operations, but then addresses it only in its “on balance sheet” form. In a world of credit default swaps and endless dozy securitization structures, it’s perfectly simple to take risk of any kind without putting it on the balance sheet.
Indeed, the leverage tax, by driving banks to opaque and unstable derivatives structures that do not appear on the balance sheet, will make Wall Street’s instability and rent-seeking worse.
Bank bonuses back to pre-crisis levels (PBS NewsHour)
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