Economic Outlook: The last laugh

By ANTHONY HALL, United Press International  |  Oct. 20, 2010 at 9:43 AM
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For all the recent talk from the White House on allowing the U.S. housing market to heal on its own terms, there are an awful lot of shenanigans afoot.

As White House spokesman Robert Gibbs said Tuesday, the Obama administration opposes a national ban on foreclosures simply because it would delay getting those unreasonably cheap homes back on the market and into the hands of new buyers.

"Again, our concern has been what that effect is for the housing market in a broader sense," Gibbs told the daily press briefing. "Take a state like Florida. About a little more than a third of the housing transactions that are going on right now are individuals who are purchasing long-foreclosed, previously foreclosed homes.

"That's in many places what is beginning to spur a housing recovery in places that have been hit extremely hard with the housing crisis and the great dip in housing prices … so our concern with that moratorium is that a process that has followed all aspects of the law and is in the midst of a contract to -- to purchase that from somebody else, that process is frozen, too."

It sounds like a solid thesis. But in politics you often have to take the high road just because it's sitting there and because someone has lit a headline under your seat.

The White House, for all that, appears to be the one federal office that is willing to let the process sort itself out on its own terms. To the left and right, everyone else is jumping into the fray.

Last week, 49 of 50 state attorneys general said they would investigate the growing concern over shoddy, rushed foreclosure paperwork that was provoking an increasing number of court challenges. Then Alabama, the initial holdout, signed on to the probe.

By Tuesday, Gibbs said the Federal Financial Fraud Enforcement Task Force was looking into the foreclosure debacle. He said the Department of Housing and Urban Development -- and it has the power to levy fines on the matter -- was exploring the issue and would sit down Wednesday with the Treasury Department and the Federal Housing Administration to discuss it. The Federal Reserve Bank said it was investigating. The Wall Street Journal reported Wednesday the Securities and Exchange Commission, the Office of the U.S. Comptroller of the Currency and the Justice Department were devoting time to foreclosures. The Federal Housing Finance Agency, as it oversees the nation's two top mortgage brokers, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp., had put its irons in the fire. The Federal Reserve Bank of New York said it was working with the Federal Deposit Insurance Corp. to unearth what it could.

Has anyone been left out? Think of an acronym and tack it to the wall.

No doubt, it is an issue where the high road is easy to find. As Gibbs said Tuesday, the White House is looking for the process to continue, as long as it is done legally.

Housing Secretary Shaun Donovan said: "Nobody should lose their home through a mistake. Even if it's one person, it's shameful ... . No matter how widespread it is, it's wrong."

And on the other side of the coin is Joshua Bartlett of Fort Myers, Fla., The Washington Post reported.

In his eyes Bartlett has bought into the me-the-homeowner-victim argument concerning the financial crisis that began with the housing market bubble and the crescendo of chaos that has ensued.

Bartlett lost his job in marketing, turned to waiting tables, but could not keep up payments on a condominium that at one point was valued at $200,000.

Unable to keep up, he gave up on making mortgage payments in late 2007 and has been living at his condo for free ever since. He said, "I don't feel remorse, because it's just a corporation." But he does feel guilty, he said, but not quite for the reason a bank might understand. He feels guilty, he said, "about my down payment and the payments I made."

He blames the banks for presenting him with a risky loan, not for his overreach as an, at the time, 23-year-old signing a deal for a $158,000 condo expecting his first job out of college to last forever.

That brings to mind another agency that would no doubt have something to say on the foreclosure mess, one that is expected to be ahead of the curve on this kind of thing.

"Look, I would be remiss if I didn't mention that some of this will ultimately fall to the role of the Consumer Financial Protection Bureau, an office that if we roll back Wall Street reform won't exist," Gibbs said Tuesday.

In international markets Wednesday, the Nikkei 225 index in Japan fell 1.65 percent while the Shanghai composite index in China rose 0.07 percent. The Hang Seng index in Hong Kong fell 0.87 percent while the Sensex in India lost 0.56 percent.

In Australia, the S&P/ASX 200 index slide 0.66 percent.

The FTSE 100 index in Britain rose 0.03 percent while the DAX 30 in Germany added 0.17 percent. The CAC 40 in France rose 0.34 percent while the Stoxx Europe 600 added 0.3 percent.

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