Well the outrage of the American Public, finally being let out of their dark mushroom gardens, may just be taking that concept of "moral hazard" and using it to their own personal advantage, against their Banker crypt-keepers ... Apparently two can play at, this Risk-avoidance game ...
Message to Mortgage Banks and the Feds: It's Time to Take the Haircut
by Nicholas Carroll, HuffingtonPost.com -- Oct 20, 2011
The "moral hazard" is worse than you feared: Americans are figuring out that morality changes as society changes, and that morality no longer includes obediently paying the mortgage. So do you want to take your haircut by mortgage principal reductions -- or foreclosures?
That is, are you ready to deal with homeowners -- or do you want your haircut with your heads plucked one hair at a time? Because principal reductions are the only realistic way left to prevent a flood of strategic defaults and foreclosures.
Mortgage Bankers chronically don't want to work to relieve home-owners from their stifling, underwater Mortgage payments ... Where's the 'quick profit' in that?
Well those home-owners may just end up relieving themselves. The urgent incentive is there.
Many already have. Have just walked away. Oh how morally bankrupt, of them.
Others simply want justice. Justice for chaos and poverty, that those morally bankrupt sub-prime Loan merchants, callously inflicted on them. Only to have those merchants, cash out and run ... before the damage was even done.
Occupy the mortgage lenders
by Simon Johnson, op-ed, Reuters -- Oct 21, 2011
Talks among state officials, the Obama administration, and the banks are currently focused on reported abuses in servicing mortgages, foreclosing on homes, and evicting their residents. But leading banks are also accused of illegal behavior -- inducing people to borrow, for example, by deceiving them about the interest rate that would actually be paid, while misrepresenting the resulting mortgage-backed securities [MBS] to investors.
If these charges are true, the bank executives involved may fear that civil lawsuits would uncover evidence that could be used in criminal prosecutions. In that case, their interest would naturally lie in seeking -- as they now are -- to keep that evidence from ever seeing the inside of a courtroom.
If the banks were ever really held accountable for the social costs of their behavior, the bill would far exceed $300-400 billion. Realistically assessed, the full downside legal risks to financial institutions are in excess of $1 trillion -- particularly if it can be demonstrated that the “mortgage-backed securities” sold to investors were not backed by mortgages at all, because the proper legal paperwork was never done.
Of course the moral outrage at the moral hazard, will be kept to a minimum, if a DOJ Mortgage Settlement Deal can be cut (at the bargain rate of $20 Billion). And the rest of the current crop of American Mushrooms can continue to be kept in the dark, and continue to be fed a steady diet of "No New Taxes on the Job Creators" platitudes. In other words, be fed the Media's standard inane BS.
The more the people come out into the light however, and pour into the streets, to say Hell No ... no more ... Enough!
... then the more the "Moral Hazard" of the crypt-keepers is made plainly obvious ... for the rest of the Who's in Mushroom-ville, for them to wake up and suddenly see.
The real hazard for them, is if we stop playing their go-along game ... a game that has far, far too few winners, anyways. A game that is by designed, based on the Mushrooms, never catching on ... just how much all our hard work has been captured and counter-leveraged, by those unaccountable, merchants of our very dreams ...
Only about once every two or three generations, do enough Mushrooms ever truly catch on ... the Opportunity usually flickers for a moment, only to see the people eventually settle for mediocrity, to be glad for tokens, and half-a-loaf ... to stoically return to the the well-worn trapping of the Status Quo ... where the moral hazard only haunts our dreams, in those rare times of social outrage and unrest.
Those trapped by poverty, however ... never do find any relief though ...
and their ranks are growing year by year, state by state, job loss after heart-wrenching loss, ... home foreclosure after yet another risk-free bank foreclosure.