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| Kevork Djansezian/AP |
Daniel Tencer
Congress will pass a bill to "forgive" banks the potentially criminal errors made in foreclosure proceedings, a senior CNBC editor predicts.
In a blog column Friday, John Carney argues that lawmakers in DC won't allow the country's largest issuers of mortgages to suffer financial losses following revelations of numerous mishandled foreclosure proceedings, especially when bailing them out this time "won't cost taxpayers a dime."
Here’s what is going to happen: Congress will pass a law called something like “The Financial Modernization and Stability Act of 2010” that will retroactively grant mortgage pools the rights in the underlying mortgages that people are worried about. All the screwed up paperwork, lost notes, unassigned security interests will be forgiven by a legislative act....
The [foreclosure] crisis is not driven by economics. It is driven by legal rights. And there’s simply zero probability that the politicians in Washington are going to let Bank of America or Citigroup or JP Morgan Chase fail because of a legal issue.
Carney predicts that the lame-duck session of Congress following this November's elections will pass the law. "Every member of Congress ... who has been voted out of office will cast a vote for the bill. And the President will sign it."
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