How to fix the foreclosure crisis, and maybe more
Jamie Dimon of JPMorgan Chase, Brian Moynihan of Bank of America, and other banking CEOs willing to show their face in public should call a press conference today and announce their intention to hire 50,000 people to deal with all aspects of the foreclosure crisis. They should hire processors who will actually read the legal documents, but also professionals to work on debtor counseling and modification, landscapers to mow loans of real estate they own, and security guards who will ensure that repossessed homes aren't stripped or occupied by squatters.
Doing so would help put a small chunk of the underemployed workforce back on the job. It would be a bold, public gesture that might spur other companies to hire. It would demonstrate to courts and politicians that the banks are finally getting serious about getting on top of the problem. Perhaps some of the newly employed will use their wages to stay current on their mortgages, and the banks can certainly afford it. Fifty thousand people at $50,000 per year comes to $2.5 billion. JPMorgan Chase earned $4.8 billion in the second quarter. In other words, it would cost the industry about what one of its leading members makes in seven weeks.
Yes, hiring people can be expensive. And when the banks bulk up their capacity to handle the millions of foreclosures more smoothly, it might mean a little less cash to pay out to top executives. But something tells me the cost of the regulation, lawsuits, and the general chaos being created by a foreclosure moratorium will be even more expensive.
Of course it’s not going to happen, not least because bank executives know too well what would happen to their stock prices if they committed to spending real money on human beings other than themselves: Many big investors almost certainly would dump the shares.
Those investors may want the U.S. employment picture to improve, but they don’t want it to happen at the expense of their earnings.
Then again, as Gross suggests, who knows what Foreclosure-Gate will end up costing the banks in the long run?
-- Tom Petruno