The reporting of the so-called "Wonkblog"'s reporting is particularly un-wonkish, describing the plan as 'complex' and talking about it in one of those artifici

The reporting of the so-called "Wonkblog"'s reporting is particularly un-wonkish, describing the plan as 'complex' and talking about it in one of those artificial newspaper pseudo-neutral points of view, affecting to be balanced while dropping loaded language like such as A courtroom victory for Richmond, a town of about 100,000, could give cities around the country the courage to act -- and potentially help keep millions of people in their homes. The plan doesn't target distressed mortgages, so it's not just a problem of loaded language designed to appeal to certain kinds of readers--it's also a bald lie. As for the other side: But even a win could spell defeat for Richmond if the financial industry cuts off lending to make an example of the city. Make an example of the city. Hmm. It's not that private industry is not obligated to do money-losing business with eminent domain thieves, it's that they want to make an example of people who cross them. Well, you can see what the writer actually believes, or at least what he pretends to believe in order to appeal to readers. The plan is not 'complex' but fairly straightforward and very obviously illegal and not in the best interests of the public. I'm not aware of any informed opinion to the effect that this is a good idea. I discussed this in an earlier post(https://news.ycombinator.com/item?id=6273836 https://news.ycombinator.com/item?id=6273836), which I think is worth reposting, because as far as I can tell little has changed since then. Repost below: ==== The blog Naked Capitalism--hardly a friend of big finance--points out that this is a scam here: http://www.nakedcapitalism.com/2013/08/beware-of-private-equ.. http://www.nakedcapitalism.com/2013/08/beware-of-private-equ.... Some key points: * The profits are being split among Richmond and a private investment firm named "Mortgage Resolution Partners, LLC". * Seizing a mortgage for less than its fair market value is blatantly unconstitutional. The argument that the value of an underwater mortgage in repayment is worth less than the house is so obviously wrong, I have a hard time believing Richmond officials honestly buy it. A mortgage that is on track to be repaid is undoubtedly worth close to the future value of repayment, even if the house is worth $0. * Big banks do not actually own most mortgages in general. So this is not a scheme to rob big banks, although Mortgage Resolution Partners, LLC certainly wants to spin it that way. * Almost all housing mortgages are merely serviced by banks but owned predominantly by entites such as "state and local governments, hospitals, Fannie, Freddie, and to a lesser degree, foundations and endowments". The banks have a legal obligation to protect these mortgages, of course. * Many of these loans are current--they're not distressed mortgages at all! They also plan to steer clear of houses with liens. Naked Capitalism comments that the plan only works financially if they go after the mortgages of those that need help the least. In short, this is a transfer of wealth from a diverse array of investors to the city of Richmond and a bunch of investment banker types--theft under the cover of populist outrage. It would also severely damage the market for future homeowners in Richmond, anyone who wants to sell their home, anyone who wants to refinance... Oh, it's also a threat to fundemental notions of private property, rule of law, and market capitalism, but distressingly few people still care about that. The bit I want to emphasize is that it's Prince John pretending to be Robin Hood.