Receiving Wide Coverage ...

B of A's Mortgage Mess: Tens of thousands of Bank of America borrowers will be evicted as a result of the bank's $8.5 billion settlement with regulators over mortgage-backed securities, the Times reported. Bank of America servicing executive Tony Meola said, "While not a desirable outcome, the recovery of the housing markets depends on moving through the foreclosure process as quickly and fairly as possible." Meanwhile, the settlement, plus the specter of an additional settlement, of up to $7 billion, with the 50 state attorneys general over mortgage-servicing practices, could leave the bank short of equity, according to the Journal's "Heard on the Street" column. Wall Street Journal, New York Times

Gupta Treated Unfairly?: Judge Jed S. Rakoff ruled Monday that former Goldman Sachs board member Rajat Gupta can move forward with a lawsuit arguing that the Securities and Exchange Commission singled him out for uniquely unfavorable treatment in violation of the Constitution's guarantee of equal protection under the law, the Post said. The Journal quotes the judge, "… there is already a well-developed public record of Gupta being treated substantially disparately from 28 essentially identical defendants, with not even a hint from the SEC, even in their instant papers, as to why this should be so." Wall Street Journal, Washington Post

Wall Street Journal

Citigroup is the latest bank charged with foreclosing on the home of an active-duty member of the military, and is being sued by the Texas National Guard sergeant whose home was foreclosed on and auctioned while he was training to deploy to Iraq. The suit, filed by Sgt. Jorge Rodriguez, claims Citi inaccurately told a judge Rodriguez was not on active duty when it foreclosed. The suit seeks class-action status.

The White House continues to discuss options for reviving the housing market, the key to getting the economy moving. One idea would be to up the ante for banks to cut loan balances for borrowers whose homes are now worth less than they borrowed. Also under consideration relaxing rules for Fannie and Freddie to increase borrowing, or having the GSEs rent some foreclosed homes, cutting the number of homes on the market. Talks are deemed "in the early stages," with no consensus on any ideas.

Private investment firms reportedly have been making home loans to borrowers that don't meet bank requirements for mortgages, and critics claims these loans share the same pitfalls as subprime mortgages did. Besides offering jumbo loans to those with questionable credit scores, the lenders are flexible about proof of income. The lenders say they are protecting themselves by requiring higher downpayments (up to 40%).

The banks and greed are not to blame for the housing crisis, but rather "Fannie Mae and the government housing policies it supported, pursued and exploited," according to "Reckless Endangerment," a book written by Times reporter Gretchen Morgenson and financial analyst Josh Rosner. In an opinion piece in the Journal, Peter Wallison, a senior fellow at the American Enterprise Institute, and a member of the Financial Crisis Inquiry Commission who dissented from the majority report, concurs. "Far from being a marginal player, Fannie Mae was the source of the decline in mortgage underwriting standards that eventually brought down the financial system," he writes. "It led rather than followed Wall Street into risky lending."

New York Times

The FDIC has sued former Washington Mutual chief executive Kerry Killinger and other former executives of the failed bank for gross negligence and breach of fiduciary duty for undertaking a so-called "higher-risk lending strategy." One former WaMu executive counters that the FDIC's lawsuit is a "public relations stunt." The lawsuit is also part of the FDIC's strategy to attempt to claw back executive compensation from officers who presided over banks that failed.

Washington Post

In a speech at the National Press Club to mark the one-year anniversary of the financial overhaul, Rep. Barney Frank, D-Mass., ranking member of the House Financial Services Committee, criticized Republicans for trying to weaken the legislation that he and former Sen. Christopher J. Dodd, D-Conn., shepherded through Congress last year. But Frank said those efforts have largely fallen short.

Federal Reserve Chairman Ben Bernanke may feel surrounded when he testifies before Congress this week. From his left, Democrats will demand to know what the Fed can do to create jobs, especially after the government reported last week that unemployment rose to 9.2% in June and the economy generated just 18,000 net new jobs. GOPers on the right will charge the Fed with "complicity" for allowing food and energy prices to skyrocket.

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