State attorneys general tackle foreclosures
TEXT OF INTERVIEW
STEVE CHIOTAKIS: State attorneys general are now involved in the federal investigation of foreclosures. Allegations include misfiling paperwork and using questionable methods to speed up the process.
Fortune magazine’s Allan Sloan says the foreclosure mess highlights a double standard between banks and mortgage holders. And says so many suspect foreclosures are a threat to the financial system and even capitalism as we know it. Good morning Allan.
ALLAN SLOAN: Good morning Steve.
CHIOTAKIS: A threat to capitalism — I mean, come on.
SLOAN: No, absolutely. People are catching on that there’s a double standard. There’s one standard for you, and you’re supposed to meet all of your obligations. And then there’s another standard for the banks which is they’re supposed to meet their obligations, but if they don’t, well, that doesn’t matter because we’ll give them a do-over.
CHIOTAKIS: Is this a too-big-to-fail thing, Alan? I mean is this why the banks are getting these slaps on the wrists or do-overs?
SLOAN: I think that’s a big part of it because many of the banks involved in this, they’re so big that if they in the end had to shell out billions or tens of billions — which is theoretically possible, they’d never be able to do it. We’d have to bail them out again. And no one’s going to let them fail.
CHIOTAKIS: Are people — and by people I mean the ones who’s houses are not being foreclosed upon — I mean, seeing what you say is going on?
SLOAN: I think so. When people meet their obligations which they’re legally supposed to do, you expect the banks to meet their obligations which apparently many of them are not doing.
CHIOTAKIS: Then why don’t we see legislation, Alan, with people starting to realize this double standard, as you call it. Why don’t we see people rising up to say, “We need to break up the banks, we need to make them less of a risk to the financial system, and end this double standard?”
SLOAN: What you see in the election campaigns through the elections tomorrow is you see all of these demands for ending the Fed or ending all bailouts or ending this or ending that, which is never going to happen. The idea that you have to change the rules and break up some of the big institutions that are too big to fail, or change the incentives — this is a little subtle, and it doesn’t fit into a three second sound byte, which is why you’re not hearing it now.
CHIOTAKIS: We’ll find out what happens after Election Day, which is tomorrow. Fortune Magazine Alan Sloan. Alan thanks.
SLOAN: You’re welcome Steve.
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