Consider the current screw up over mortgage paperwork. From a public policy perspective, this is a fantastic opportunity to get positive changes for everyone. Why? Because the financial industry now has something it desperately needs -- clear rules for settlement of titles. Furthermore, for quite some time now people have been pointing to the glut of foreclosures as a problem depressing the industry because it creates vacant neighborhoods, increases inventory on the market, and constitutes dead weight on bank balances (the "toxic assets") we were all so worried about.
But instead of an opportunity, or simply a relief from the press of foreclosure for hard hit families, the press is busy explaining to us why a foreclosure moratorium is bad.
Mind you, the utter failure of any leaders in public policy to seize the instant opportunity is equally depressing. But consider legislation which provided for a uniform system of title settlement, coupled with reform of the bankruptcy code to permit "cram down" as part of personal bankruptcy (i.e., restructuring residential mortgage terms as we do commercial debt to create a payment plan rather than simple seizure) and a general revaluation of foreclosed and distressed properties to reset the real estate market back to something sensible. Such a bill would give banks what they want and need in exchange for concessions on a key policy point that benefits consumers, the economy as a whole, and even lending institutions as a whole.
But no such initiative is likely to emerge any time soon in light of the current dysfunction on our political and public policy system.