From what candidates on the ground are telling me, though, it is still the business reporters who have been covering the issue, not the political reporters, and Democrats are not necessarily getting the political credit they deserve. Reporters are still trying to put the who-done-it pieces together on the scandal rather than being focused on which politicians are standing up to the bankers on the issue. We need to make sure voters understand who is fighting to make sure the banks and foreclosure mills are held accountable.
Democrats should not let this opportunity slip away from us: if we embrace this issue politically, telling a story about how we are the ones rooting out corporate corruption, we are the ones standing up to the banks when they try to defraud consumers, this could be very powerful, and it could strongly feed that broader frame around Democrats taking on special interests on behalf of the middle class. With this issue now front and center, Democrats should seize the initiative, put Republicans on the spot for why they are doing nothing to stand up to the banks. This could be one of the election dynamic turning things that upends the Republicans' ability to make their closing argument about government being the root of all evil stick. The White House right now is sounding too wonky and even-handed on this issue: they need to make clear whose side they are on.
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We have all seen last month breaking news and/or new frames shift electoral dynamics. The collapse of health care in the fall of '94 drove Democratic base performance into the dirt, and turned a tough year into a route. The fundraising scandal that broke in Oct of '96 changed the dynamics just enough to keep us from retaking Congress. The focus on impeachment in the fall of '98, and our "it's time to move on and deal with the issues that really matter" pushback turned a likely Democratic slaughter into a good year for us. The Foley scandal in Oct of 2006 stopped a potential Republican comeback dead in its tracks, and turned a close call into us easily retaking Congress. I think this foreclosure fraud crisis could be the same kind of deal. It allows us to take anti-special interest frame we have all been building for a while, and bring it to a whole different level. But we need to seize the issue, and take the credit we deserve for doing the right thing in fighting for consumers against the power of the big bank fraud. If we are willing to wholeheartedly take this mantle on, the election dynamic has the real potential for a last minute shift.
[I]f, as appears to be the case, the overwhelming majority of homeowners facing foreclosure have fallen far behind on their payments, then it is a good deal harder to summon up the same moral outrage over reports that the banks and loan service companies cut corners, failed to keep the right documents and engaged in shoddy and even fraudulent practices. Just because the banks and servicers have screwed up doesn't mean they and their investors are no longer entitled to get their money back.Certainly banks and servicers should, at their own expense, be sent back to do things right. Those who engaged in fraud should be punished. And if there are legitimate questions about who owns a loan, those will need to be resolved before the proceeds of any foreclosure are distributed.
But none of that changes the basic reality that there are millions of Americans who took out mortgages they could not support on houses they could not afford...
[T]hose who are cheerleading for a moratorium should realize they can only push things so far. It would not help the recovery of the economy, or the real estate market, if the foreclosure process became so hopelessly tangled that banks and investors effectively lose the ability to recoup the remaining value of their collateral. That would provide some immediate financial relief to households facing foreclosure, but it would encourage many more homeowners to begin shirking their mortgage payments in the belief that they would also be able to avoid the consequences. The long term consequences of that would be that mortgage rates would be higher and mortgage loans would be smaller and harder to get.Perhaps it is only natural for Americans to take some guilty pleasure in watching as the big banks and Wall Street wizards who created this flawed and complex mortgage machine are hoisted on their own petards. But be careful what you wish for. The financial system is still fragile enough that we may not be able to afford a full helping of revenge.