This week will likely present a flurry of news coverage on the ongoing foreclosure crisis, as bankers and consumer advocates head to Capitol Hill to appear before the Senate Banking Committee. The hearings follow the release of a report from the Congressional Oversight Panel warning that the apparently widespread fraud in foreclosures could undermine the ownership status not only of foreclosed homes, but of all securitized mortgages. (Meanwhile, the financial industry has mobilized to counter any backlash.)
Seton Hall Law Professor recently authored a blog post connecting fraudulent foreclosure practices with a larger decline of the rule of law. The Senate report seems to at least partially share this viewpoint: “Clear and uncontested property rights are the foundation of the housing market. If these rights fall into question, that foundation could collapse”.
But in the context of recent policy approaches to problems in the financial industry, as well as the questionable loyalties of key Senate Banking Committee figures like Chris Dodd and Tim Johnson, what reason do Americans have to believe in the federal government’s ability and willingness to protect the rights of homeowners and consumers against the profit motive of the financial elite?