Foreclosure, Fraud and Pharaoh

Yesterday, Mike Lux called on Democrats to stage a ninth-inning rally this election cycle by going after fraud in the foreclosure system:

There is a huge opportunity to create a late shift for the better in Democratic electoral fortunes because of the foreclosure fraud scandal. With the issue exploding, Democrats need to take advantage of the fact that it us who are doing the right thing on this issue, while Republicans are at best standing on the sidelines doing nothing, and at worst getting in the way of solving the problem. Democrats being on the side of homeowners getting screwed and being against bankers and lawyers who are committing fraud by sending people to foreclosure mills feeds perfectly into the overall theme progressives and some Democrats have been pushing that our government and economy can only be fixed by standing up to corporate predator special interests.

Lux’s approach seems like smart politics, and as Joan McCarter points out, it’s not like Democrats have been silent on the issue. They should highlight their efforts and make a narrative out of it.

Of course, since this involves the Democrats, rather than an organized political party, getting in front of a popular and populist agenda is far too simple. The Obama administration is happy to sit this issue out, even if Congressional Dems aren’t. The charitable explanation for this curious reluctance is the one offered by the White House: declaring a foreclosure moratorium punishes legitimate interests and puts economic recovery at risk. A not-so-charitable explanation is that this White House needs Wall Street bucks to finance its next campaign and is therefore unwilling to step out against robber barons, even in their excesses.

That leaves the most of us to appreciate stories like this one perhaps more for the principle than the practical effect:

Ohio’s attorney general, Richard Cordray, might be seen as their pinstriped avenger.

“There’s a belief here that Wall Street is a fixed casino and it’s back in business, and we’re left holding the bag,” said Mr. Cordray, whose office overlooks East Broad. “It’s important for us to show we’ll go after a company that does wrong.”

Mr. Cordray in two years in office has demonstrated a willingness to sue early and often, filing lawsuits against global financial houses, rating agencies, subprime lenders and foreclosure scammers. He has wrested about $2 billion so far, a string of gilded pelts: a $475 million Merrill Lynchsettlement, $400 million from Marsh & McLennan and $725 million from the American International Group.

Last week, he filed suit against GMAC Mortgage, accusing the loan servicer of filing fraudulent affidavits in hundreds of Ohio foreclosures.

His office has returned money to investors, pension funds, schools and cities. And he has directed millions to agencies fighting foreclosure.

“We see what Washington doesn’t: the houses lying vacant, the eyesore stripped for copper piping with mattresses out back,” Mr. Cordray says. “We bailed out irresponsible banks, but we forgot about everyone else.”

Speaking of principle, stories likes always put me in mind of scripture:

But the king of Egypt said to them, ‘Moses and Aaron, why are you taking the people away from their work? Get to your labors!’ Pharaoh continued, ‘Now they are more numerous than the people of the land and yet you want them to stop working!’ That same day Pharaoh commanded the taskmasters of the people, as well as their supervisors, ‘You shall no longer give the people straw to make bricks, as before; let them go and gather straw for themselves. But you shall require of them the same quantity of bricks as they have made previously; do not diminish it, for they are lazy; that is why they cry, “Let us go and offer sacrifice to our God.” Let heavier work be laid on them; then they will labor at it and pay no attention to deceptive words.’

It doesn’t take much imagination to connect the dots here. True, Pharaoh didn’t use fraudulent documents to maintain his economic edge. But when the average people cry out for relief, they’re called lazy (or irresponsible) by those who control the economy. That much is the same. And instead of a respite, the avenues of relief are closed off and the people are told to work harder and pay no attention to the rabble-rousers who dare suggest that things might be different. Back in the day, it was Pharaoh and his brick quotas. These days, it’s megacorporate banks and mortgage notes. That much never changes. The only question is if Democrats are more interested in playing the role of Moses or the dutiful Israelite overseers:

The taskmasters were urgent, saying, ‘Complete your work, the same daily assignment as when you were given straw.’ And the supervisors of the Israelites, whom Pharaoh’s taskmasters had set over them, were beaten, and were asked, ‘Why did you not finish the required quantity of bricks yesterday and today, as you did before?’

Then the Israelite supervisors came to Pharaoh and cried, ‘Why do you treat your servants like this? No straw is given to your servants, yet they say to us, “Make bricks!” Look how your servants are beaten! You are unjust to your own people.’ He said, ‘You are lazy, lazy; that is why you say, “Let us go and sacrifice to the Lord.” Go now, and work; for no straw shall be given you, but you shall still deliver the same number of bricks.’

I’ll add some thoughts later on how to respond to the situation, but for right now, it’s enough to say that the more things change, the more they stay the same. Except this time the beating looks to be coming at the polls instead of at the hands of the Egyptians.

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