Excerpts from recent editorials in newspapers in the United States and abroad:
New York, Feb. 25, The New York Times on mortgage relief:
A year ago, when the nation’s biggest banks settled with state and federal officials over claims of foreclosure abuses, the public was led to believe that the deal would allow millions of hard-pressed borrowers to escape the threat of foreclosure. It still hasn’t happened.
A third progress report was issued recently by the monitor of the settlement, which, among its terms, required the banks to grant $25 billion worth of mortgage relief, much of it by reducing the principal balances on troubled loans. The report showed that through the end of 2012, 71,000 borrowers had their primary mortgages modified, versus 170,000 who received help on their second mortgages, including home equity loans.
Both types of assistance can help struggling borrowers — to a point. But as Jessica Silver-Greenberg reported in The Times, housing advocates say that in many cases, banks are not helping with troubled primary mortgages, which often leaves the homeowners facing foreclosure. Instead, the banks are forgiving the second mortgages, which allows them to say that they have met their obligations under the settlement.
In other words, banks are structuring the debt relief in ways designed to tidy up their balance sheets, rather than to keep as many people from losing their homes as possible. Banks often do not own the primary mortgages; they only service them for investors who own them. But they do often hold second liens on their books. In general, the holder of a second lien gets nothing when a home is worth less than the mortgage balance or is sold in foreclosure. But by forgiving the second liens, the bank at least gets credit for “helping” the borrower.
In the report, the settlement monitor, Joseph Smith, said the banks still had much work to do on the borrowers’ behalf. We’ll believe it when we see it.
London, Feb. 26, London Evening Standard on Italy’s election:
The results of Italy’s election threaten the country with paralysis; they also put at risk the Eurozone’s fragile recovery. While Pier Luigi Bersani’s center-Left bloc has won the lower house, narrowly beating Silvio Berlusconi’s Right-wing bloc, neither has control of the upper house. Meanwhile protest votes have given comedian Beppe Grillo’s Five Star Movement third place. That Grillo could make so large an impact so quickly is a measure of the volatility and extreme disaffection of Italian voters. Berlusconi’s resurgence says much the same: it beggars belief that a man convicted of tax fraud and disgraced in multiple sex scandals could still come close to leading Europe’s third-largest economy.
What is clear is that whatever governing arrangement is now cobbled together, the fiscal discipline of Mario Monti’s brief spell as prime minister is over. Monti’s austerity program was, from late last year, starting to have an impact: combined with the European Central Bank’s pledge to shore up the Italian economy, it had contributed to several months of relative calm in the eurozone. Now yields on Italian government bonds have risen sharply and markets are down. ...
Italy may well now face another election, thereby prolonging the uncertainty. But it is hard to see any major party championing the austerity that the country’s ramshackle finances need: Monti’s party got just 10 per cent of the vote. With the Spanish government threatened by a major corruption scandal, and increasing international criticism of French President Hollande’s lackluster economic management, the outlook for the eurozone’s troubled economies is looking significantly worse than it did two months ago. As the United Kingdom’s largest export market, that should worry us.