Banks Exacerbating Foreclosure Crisis

Banks and financial institutions are making the foreclosure crisis worse, as lobbying efforts seek to block bankruptcy courts from gaining more power to reduce debt, according to this article from <em>Der Spiegel</em>.
February 17, 2009, 11am PST | Nate Berg
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"But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan -- whatever its details -- can't possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

So far the industry hasn't shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges."

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Published on Sunday, February 15, 2009 in Der Spiegel
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