A New York State Senator has reportedly labeled U.S. Bancorp as a "'subprime Scrooge'" for its role in filing foreclosure lawsuits after receiving U.S. Taxpayer Funds. U.S. Bancorp denies any responsbility. It says it is only a Trustee "for investment vehicles collateralised by pools of mortgages." Stacy-Marie Ishmael, "Senator Lambasts 'Subprime Scrooge'" (Financial Times.com, Friday, December 5, 2008).
A spokesperson for U.S. Bancorp says that the state senator has got the wrong culprit. It blames the servicer of the loan or mortgage for filing foreclosure lawsuits when people cannot pay their bills. Id.
Investors holding 'investment vehicles collateralized by pools of mortgages,' i.e., subprime mortgage securities, are apparently not in accord with this view, however. As reported in a recent post in this space and in the newspaper report linked in it, investors are suing servicers who have had the audacity to reach settlements with the States in which the servicers agree to ease the terms of the mortgages.
This actual development did not enter into the theoretical hypothesis of the current Federal Reserve chair, it seems, when Mr. Bernanke reportedly suggested a possible option divorced from reality, that once again Federal Taxpayer Funds could be paid to such people, whereby "the government could share the costs when a loan servicer reduces a borrower's monthly payment." Joanna Chung, "Bernanke Urges Action on Foreclosures" (Financial Times.com, Friday, December 5, 2008). Will the Federal Taxpayer under this theoretical option also share the costs when a loan servicer gets sued by an investor?
Hmm. Back to reality. A trustee in general terms is always an individual or entity that acts on behalf of another, with powers entrusted by the other to her or him or it. A trustee that does NOT have such delegated powers is simply not a trustee.
A trustee that fails to act as a fiduciary, however, presents another story. Perhaps Scrooge blaming Marley for Scrooge's sins is the other story.
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That's a great story! I can't believe no one has posted a comment here about it yet! Keep up the good work!
Posted by: Credit Help | February 14, 2009 at 01:49 AM