Should the American Public Get Stuck With the Bill for the Banks’ Bad Decisions
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The action of sending in their keys to the residence in lieu of the loan payment has been called “jingle mail.” Both homeowners in default or who do not want to overpay for their residence as well as investment banks are increasingly turning to jingle mail to relieve themselves of large financial obligations.
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Financial companies have also been relying on jingle mail, a form less public than homeowners but also more costly. The Federal Reserve is encouraging banks to use as collateral bad mortgage debt in return for loans, which is encouraging the whole financial system to get these toxic loans off of their accounting records and keep up an appearance of solvency.
When banks send in defaulted mortgages to the Fed in return for Treasury securities and loans, they are building up an edifice of financial fraud and sticking the rest of the country with their toxic mortgage debts. Large financial institutions sending in jingle mail and sticking the American people with the cost is a clear reflection on the moral risk, corruption, and financial manipulation of corporations taking advantage of the state.