Good stuff from Mike Konczal on Third Way’s proposed bank bailout around fraudclosure. He concludes with a very loose prescription for a real solution, contra Third Way:
I’ll have more about what an alternative solution should look like, but this isn’t it. We need to remove servicing from loan modification process. That involves canceling the mess that is HAMP, creating a chapter M for bankruptcy, forced mediation before foreclosure, and an emphasis on principal writedowns. We need a serious investigation of the servicing industry, focused on criminal conduct and the software used. And we need to see if Dodd-Frank needs to be put into play for bank restructuring. That’s the price for fixing whatever the bank lobby wants done at the Federal level.
We know what we need to do in order to build out from this financial crisis and get the economy going again; it’s just a question of whether or not we’ll go for another bailout to paper over the losses.
I really look forward to what Konczal puts forward as an alternative solution.