Beginning back in the 1980s, Dana Carvey played a character named Enid Strict, otherwise known as “The Church Lady,” on the comedy show “Saturday Night Live.” Enid is best remembered for her signature line, “Isn’t that special?” It is what comes to mind as we watch the next scene in the long-running saga of the subprime debacle.
It is more than a little disturbing that the Congressional Oversight Panel (COP) is now warning that the documentation process is so spurious it may be difficult to determine who owns what properties. It is bad enough that the loan files were defective, maybe even fraudulent, and that they were then packaged and sold anyway. Never mind that the audit firms and lawyers involved in “reviewing” these securitizations for truthful disclosures apparently really didn’t. And never mind that the issuers of these securities may be forced to take many of them back, at big losses. It is what the COP calls a “potentially” severe consequence that matters most. Namely, if we can’t sort out who actually owns the properties such that these troubled assets can be foreclosed, sold, and allowed to clear, the systemic consequences could be, well, severe. If only we could just “suspend the rules” as they often do in Congress and send all this compost right back to the institutions (the originators and securitizers) that created it.
That would be special.