Posted on Monday, April 4, 2011
To the Editor:
In “Another Inside Job” (column, March 14), Paul Krugman endorsed the proposed settlement between the state attorneys general and five of the largest mortgage servicing firms in the nation, and condemned those policy makers who have questioned or criticized the proposal.
Let’s be clear: The state attorneys general’s proposal is just that — a proposed settlement. Even if the allegations against the firms involved are proved accurate, it doesn’t mean the entire mortgage industry is systemically flawed and in need of wholesale restructuring.
The proposal would fundamentally restructure the mortgage industry — mandating changes to every detail of how servicers operate. It would also turn on their head traditional concepts of borrower care, individual responsibility and the common sense not to take on more debt than one can reasonably repay.
Mr. Krugman laments, “It’s the prosecutors who find themselves on trial.” Prosecutors must prove their case before a penalty is imposed. That’s their job. Policy makers who are now raising questions about the merits of this proposal are to be applauded. They are doing their job.
THE NEW YORK TIMES - Frank Keating, President and Chief Executive, American Bankers Association