The story from Housing Wire sounded pretty formal: the Federal Reserve Bank of New York was stepping up with a plan to fix the looming securitization and chain of title problems in housing, which could cost the big banks tens of billions, if not more, to fix. Given that the FRBNY is essentially controlled by Wall Street banks, the result of these meetings will undeniably be some kind of legal reverse engineering that will indemnify violations of the law and cure the system.
There’s only one problem with this. The Federal Reserve Bank of New York has about as much control over the legal issues in securitization as I do. They have no jurisdiction whatsoever over the process. State courts are the arbiter of these transactions and whether they were done legally.
I appreciate the FRBNY’s spunk in trying to legalize MERS, but they simply have no jurisdiction to do so.
But the New York Fed said solutions are on the way. The Uniform Law Commission and the American Law Institute, which facilitated the recent meetings, seek to clarify and update federal and state laws governing the securitization process.
They “have joined forces with various stakeholders, including the Federal Reserve Bank of New York, to deal with the legal complexity and the fact that much of the applicable law no longer adequately reflects modern financial practice and technological developments,” the N.Y. Fed said.
The two organizations also drafted a report to guide judges and lawyers involved in the transactions, and, the central bank said, should make the application of present laws more transparent.
This is about as important to the state courts dealing with the chain of title fallout as if Ashton Kutcher and the London Philharmonic joined forces and wrote up a report for judges and lawyers on how to deal with the issue. I’m sure the NY Fed really wants to affect the process for their big bank paymasters, but they are essentially powerless in this regard. You could maybe expect some judges to listen to them on one or two points, as the issues are complex and perhaps new to some courts. But that’s on the judges. In truth, this is a con job, where a group with an official-sounding name tries to bully the legal system into doing their bidding.
To better follow the ups and downs of MERS, you should check out SourceWatch and their MERS page. It’s an extensive listing of the latest developments.