Morgan Stanley's agreement to end bad loan practices is laughable

The Wall Street Journal report that Morgan Stanley "Under a pact with Benjamin M. Lawsky, superintendent of New York's Department of Financial Services, the New York securities firm and three other companies pledged to adhere to business practices that aim to prevent mishandling of loans and end "robo-signing," in which bank employees signed foreclosure documents without reviewing case files as required by law.

Now what's wrong with that picture?

Here's the problem: After the financial crisis imploded intensifying the foreclosure housing crisis, foreclosure and house loses were (and continue to be) massive. The banks were implicit in the causing of the housing crisis. However, thus far very few, if any, major bankers or banks were implicated criminally or fined substantially for their direct causation. Instead, the banks were given bail outs and their profits quickly returned to pre financial crisis levels. On the other hand, main street or the 99%ers suffered losing homes and value to their investments.

So now Morgan Stanley is only being asked to play nice, no more bad guy stuff. And so they have agreed to "prevent mishandling of loans and end "robo-signing". Where's the teeth? Where is the bite to this agreement for the banks prior practices that have hurt so many? If all the bank has to do is agree and this all goes away then they, Morgan Stanley, will likely offend again.

Bank executives will have to be jailed, the banks will have to be fined and regulations put place to prevent the prior practices. By doing nothing, by not putting any significant fines against the major banks or jailing major executives of the banks that were the most egregious, the regulators are complicit. Leaving the regulation of the banks to the banks will never compel them to act responsibly. The banks are in business to make money, to please their share holders. The bankers and banks, the big banks, have to be sent a message. If the regulators or law makers would only measure the enormous negative impact of the banks' practices against their recent agreement to "do no more wrong", then the injustice would be clear. Solution: The banks have to be compelled to act, not asked to act.

By William Simms
info@ehomeassistance.com