In this Naked Capitalism piece, Yves expresses her opinion that despite last week’s reported attempts to reframe MERS and provide fig leaf cover for the allies of bank bailouts, this is unlikely to happen.
The industry is seeking legislation that would effectively affirm MERS’s legality and block any bill that would call into question what MERS does.
The latter bit, trying to block anti-MERS legislation, does have a shred of logic, given that the electronic database is coming under unfavorable scrutiny. Not only has Marcy Kaptur proposed legislation that would bar Fannie and Freddie from buying mortgages registered in MERS, but even Republican senator Richard Shelby, who once owned a title insurer, roughed up MERS president R.K. Arnold in hearings earlier this week.
But the idea of passing a Federal statue to solve MERS’ growing state-level problems is a huge stretch. As the latest report of the Congressional Oversight Panel noted,
In the absence of more guidance from state courts, it is difficult to ascertain the impact of the use of MERS on the foreclosure process. The uncertainty is compounded by the fact that the issue is rooted in state law and lies in the hands of 50 states judges and legislatures.
We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause, and hence not subject to Federal intervention. So the idea that MERS can be legitimated by Congress appears far-fetched.
She is probably right on this particular legislative idea. But I would not underestimate the power of the banks, and this is about the banks, not about MERS. The banks run the governments, as the selling out of the Irish people to save bankers and bondholders attests. Even Moody’s is explicit that the aid package from the EU shifts the burden of the banks to the Irish sovereign. Governments may fall, but institutional bondholders won’t. In fact, the trans-national companies that went to Ireland to evade U.S. income taxes won’t help out either. Several of these threatened to pull out if Ireland if their tax scheme is modified.