“MERS’ members, therefore, had overwhelming incentives to engage in foreclosure fraud. The loans they were seeking to foreclose on often lacked essential documentation and were induced by defrauding the borrower. They had no legal right to foreclose, but that result was unacceptable to the senior officers controlling the loan servicers. They insisted on results, and did not monitor compliance with the law. The result was tens of thousands of felonies – monthly – by some of the largest financial institutions in the world. Filing false affidavits became business as usual. No one senior in the Justice Department or administration appears to be seriously upset about this. These felonies were committed by, or at the direction of, MERS “officers” – and MERS does not appear to be seriously upset about fraudulently foreclosing on the homes of tens of thousands of Americans. I study fraud by elites, and even I am stunned by the frequency and nature of the frauds and felonies and the lack of prosecutions and the overall blasé attitude by CEOs to the fraud and felonies.”
One of the defining motifs of theoclassical economics textbooks is the provision of examples of the unintended consequences of government action. Those consequences are invariably negative. The narrative is the government intended to achieve some goal, e.g., help the poor, and ended up harming the poor. Four counter narratives virtually never appear in these tracts. Theoclassical economists rarely mention: 1. Any governmental program that succeeds in its aims 2. Any governmental program that has unanticipated, positive consequences 3. Any private action that has negative unanticipated consequences 4. Any private action that has negative, intended consequences
A fifth counter narrative sometimes appears in theoclassical accounts – governmental actions that are intended to be harmful by the private parties that corruptly convince public sector actors to aid the private parties at the expense of the public interest. The fifth example reflects poorly on both the public and private sector actors and suggests that the private sector is a source of corruption of the public sector – which fits poorly with theoclassical dogma.
This column focuses on MERS as an example of the first and third types of counter narrative. It will be the first in a series of columns about MERS.