Foreclosure Bailout is a Coverup

Suggests a San Mateo Attorney in the San Francisco Chronicle.

….But unfortunately, the “freeze” is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with “working families,” keeping people in their homes or any of that nonsense.[googmonify]4494413162:right:250:250[/googmonify]

The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

He makes some excellent points although I suspect that election year fears are also substantially feeding these bailout attempts. This article is well worth reading because he is bringing up some points that have not already been endlessly rehashed.

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