Looks like we may have another bailout coming:
Widespread problems in how U.S. lenders documented foreclosures could spark a wave of legal challenges resulting in massive losses to banks and serious new troubles for the housing market, a federal watchdog warned on Tuesday.
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In the worst-case scenario, the panel said banks may be unable to prove that they own the mortgage loans they claim to own, legal challenges could call into question the validity of 33 million mortgage loans — many of which were then securitized and sold to investors — and banks could face billions of dollars in unexpected losses.
If, indeed, the worst happens, the banks will once again go to the Feds with their hands outstretched. These are the banks who purchased a Republican Congress just a few weeks ago, the same Republicans who were blaming Obama for the bailout that they voted for and from which their contributors benefitted so much.
Here’s what should happen, if the Democrats had any brains and/or political sense. The Democrats would step back and let the Republicans, with a smattering of blue dogs, take the lead in trying to rescue the banks. Make them step up, load and clear. Obama should threaten to veto any new bailout. This time, we should nationalize, as we should have done the last time. At all events, the Democrats should force the Republicans to put their fingerprints indelibly on any bailout.
Here’s what will happen. Obama will step up to “do the right thing”. He will seek bipartisan compromise. He will get some Democrats to fall on their swords, whose votes, along with those of safe-district Republicans, will be enough to get the banks what they want. Once the deed is safely done, the Republicans will tar the Democrats with it.
Then Obama will blame himself for not fostering a more bi-partisan atmosphere.
To which one can only observe that even Charlie Brown never blamed himself when Lucy pulled back the football.
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