Once again we see the Mainstream Media try to spin Foreclosuregate:

Funny how many media accounts begin with that rarest of creatures, a homeowner fully paid up on his mortgage, or better yet a Florida man who paid cash for his house, and who was foreclosed on anyway thanks to a paperwork error by some confused bank. This poor shmuck then is made to symbolize the larger phenomenon when in fact the larger phenomenon is precisely the opposite.

Funny how The Journal, and you, completely ignore why all these "robo" things are going on.  Why the documents seem to have magically disappeared - and why an industry that has a thousand year history of studiously keeping its books of account can't produce the essence of the contract - the paper bearing the borrower's signature.

We hasten to add that technicalities are important; the rule of law is nothing but a profound commitment to honor technicalities. But let's understand that in the absence of the snafu, we'd have a faster, smoother-working foreclosure process, in which more Americans would more quickly be shoved out into the street in perfect compliance with the law.

Well, no, we wouldn't.  And that's the problem - and the root of the lie.

See, were the documents produced - in perfect accordance with the law - we'd have hundreds of thousands of challenges to the Truth in Lending statute.  We'd have challenges to the implied covenant of good faith, since Citibank has admitted that it knew that by 2007 eighty percent of its loans were bad - a clear statement of knowing malfeasance.

And we'd have all sorts of challenges by MBS holders, who would be arguing (successfully!) that the loans were never conveyed, they don't own MBS, they were sold empty boxes and they'd be pounding the table demanding that the banks give them back their money.

The white-hat, black-hat casting couch has become crowded with gray hats. The Obama administration has been trying to keep people in their homes by cutting their mortgages down to a size they could afford, but has succeeded in modifying relatively few, and then mostly for people so hard-up they defaulted anyway.

That's because the original contract was fraudulent in the inducement - and as Citibank has documented, the banks knew it.

The Uniform Fraudulent Transfers Act makes these debts fraudulent in both directions - that is, it is fraudulent to obtain a loan where you know you cannot pay and it is fraudulent under the implied covenant of dealing in good faith for a creditor to give you credit they know you cannot service.

That is, any loan in which someone was qualified on the teaser rate, and for which the bank cannot show a reasonable expectation of how the consumer would be able to service the loan once the teaser had expired, can be ruled void as having been entered into in bad faith by the lender.

Politicians have been frequent floggers of the bankers-as-villains, borrowers-as-victims story line. Yet the government has moved heaven and earth to prop up the self-same banks.

Well yes, this stone is one properly cast.  The government should have put all of these banks into receivership in 2007 and prosecuted their officers and directors for fraud.  It still should - right now, right here, today.

Every foreclosure is a different story, some painful to hear. But we had a housing bubble, and bubbles by definition occur because the incentives permit them to occur: The Fed kept interest rates low. Regulatory policy favored shoehorning more people into homes. Enormous tax inducements were dangled to encourage housing debt. Not outside the laws of human nature, an industry on the make—the subprime industry—emerged to exploit these conditions.

You forgot one word: Fraud.

And that's the most important one.

These mortgages weren't made by people who were just greedy in the banking industry.  Oh yes, they were greedy.  So were homeowners.  But the law imposes an implied covenant of fair dealing on the institutions as well as on the borrowers, and as Citibank and Clayton have documented under oath there's a damn good case to be made that this covenant was breached in 80% of the loans being made by 2007.

When you screw 8 out of 10 people - knowingly and intentionally - any honest assessment of what went on must include the "F-bomb" - and any honest and fair law enforcement component of a government is forced to conclude that we need thousands of pairs of handcuffs for the guilty parties.

But holding Wall Street to account for Wall Street's intentional looting of the citizens would leave you with a paper that didn't have any remaining delivery addresses, wouldn't it?

So instead of honest reporting and honest opinions, we have America's Paper of Record when it comes to the capital markets instead attempting to blow more smoke over the landscape in a vain (and futile) attempt to cover up the truth:  Wall Street ripped off the public and effectively bribed and extorted Congress in order to avoid being held to account.

Until this changes and the people responsible are held to account our economy cannot - and will not - recover.