Last week, the attorneys general of all 50 states, together with federal regulators, proposed a 27-page settlement to the robo-signing scandal that triggered the foreclosure crisis. Predictably, the lending community responded with a distinct lack of enthusiasm to the terms. On top of that, on Wednesday, congressional Republicans sent a letter to Treasury Secretary Timothy Geithner raising "numerous objections" to the proposed settlement.
It appears that what congressional Republicans dislike about the settlement is that the settlement essentially amounts to a gigantic set of regulations for the mortgage-servicing industry. In the letter, the Congress-critters write, "The settlement would transform the mortgage-servicing industry and fundamentally change the rules that have historically governed relationships among borrowers, servicers and investors... The breadth and scope of the draft settlement proposal raise significant concerns about its effect on the financial system."
Speaking as a conservative Republican myself (it was obvious from my previous posts, right?), I can agree to these reservations. As it happens, I like quite a few of the reforms contained in the settlement, such as elimination of the "dual-track" problem. But if we want such reforms, they should be proposed, debated, passed by a frickin' vote of the legislators (what the heck do we elect you and pay you for?), signed into law by the President, and be the law of the land.
This back-door regulation-by-voluntary-settlement smells unto the high heavens.