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David Weidner's Writing on the Wall
Oct. 12, 2010, 12:00 a.m. EDT · Recommend (7) · Post:
View all David Weidner's Writing on the Wall "º
"¹ Previous Column
The markets are broken and it's getting worse
First Take "º
Pay on Wall Street knows no boundaries
By David Weidner, MarketWatch
NEW YORK (MarketWatch) "” There's a joke I like to make to rookies before we go live on our News Hub shows.
After the new participant counts to 10 for an audio check, I usually say, "You have passed the exam to become a mortgage banker." Watch the News Hub.
Reuters Bank of America President and CEO Brian Moynihan
It turns out that's closer to the truth than most of us ever realized.
Judging by the failure of big banks to get their foreclosures in order, someone who can count to 10 might be overqualified.
What other conclusion can one come to after the wave of moratoriums placed by major banks on their foreclosure proceedings? GMAC, J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 40.02, +0.29, +0.73%) and PNC Financial Group Inc. /quotes/comstock/13*!pnc/quotes/nls/pnc (PNC 52.65, -0.19, -0.36%) have halted proceedings in 23 states. Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 13.31, +0.16, +1.23%) , living up to its desire to be a national bank, has stopped proceedings in all 50 states.
It's a humiliating, time-consuming and costly mistake by the banks, and a kind of karmic justice. But their bungling is going to cost us and our economy, as the housing market and people desperate to start anew try to recover.
Will other banks follow Bank of America's lead and what impact will the move have on the housing market? Rick Brooks and Brett Arends discuss.
At issue is "robo-signing," where bankers signed off on mortgage documents saying they've read and understand them "” as many as 18,000 a month. Read story on the "robo-signer" controversy in the banking industry.
Sorry, but as judges have pointed out, no one can read a single mortgage document in a day, much less hundreds of them. Now, the banks have to go back and read those tomes of legal gobbledygook and try to make sense of it.
"We haven't found any errors," said Brian Moynihan, Bank of America's president and chief executive. "It's technical issues and we're doing our homework." See story on B. of A.'s decision to halt foreclosures.
Some say the foreclosure halt will be good for housing. Cheap homes won't be flooding the market. Also, borrowers will be able to save money by staying in their homes as the process drags out, and other borrowers may be able to get current with added time.
But that's a short-term view. For most borrowers, foreclosure is going to come eventually. Chances are, if a homeowner was unable to rework a loan, they're not going to be able to do that now. Those homes are going to hit the market eventually, putting more pressure on home prices.
The reality is most Americans who bought during the last decade have an unhealthy amount of personal wealth tied up in their homes. A study by the Congressional Budget Office in 2007 found that rising home prices gave consumers confidence to spend even though household income was flat or falling.
David Weidner is the Wall Street columnist for MarketWatch. He formerly covered M&A and financial services at The Daily Deal, American Banker and Dow Jones. He writes the Writing on the Wall column which appears Tuesday on MarketWatch and Thursdays on WSJ.com. He also is a regular contributor to the News Hub.
Wall Street's pay projections starkly contrast the reality for most Americans, who are seeing little, if any, rise in wages. The pay figures also sharply underscore how reform, bailouts and aftermath of the financial crisis failed to influence pay.
11:25 a.m. Today11:25 a.m. Oct. 12, 2010 | Comments: 111
- hanubo | 11:24 p.m. Oct. 11, 2010
"David Weidner's Writing on the Wall: Banks bungle foreclosures, but we'll suffer: The foreclosure freeze is a humi... http://bit.ly/deywfz" 11:29 p.m. EDT, Oct. 11, 2010 from davidweidner
"Another kind of proprietary trading gone awry. RT @wsjpop: Bonuses Haunt Wall Street http://on.wsj.com/bFbkos" 11:35 a.m. EDT, Oct. 11, 2010 from davidweidner
"Reform is for the other guy. RT @wsjpop: Congress Aides Gain From Stock Trades http://on.wsj.com/dhaeRN" 11:33 a.m. EDT, Oct. 11, 2010 from davidweidner
"I'll get excited about the Google car when I see it navigate crosstown through Midtown traffic." 8:40 a.m. EDT, Oct. 11, 2010 from davidweidner
"RT @NYTimesDealBook or at least til after bonus season. Bankers Say Regulatory Crackdown Must Move Slowly http://nyti.ms/c0D04k" 6:44 a.m. EDT, Oct. 11, 2010 from davidweidner
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