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ABA Challenges Op-Ed on Proposed Mortgage Servicer Settlement

Posted on 3/17/2011

ABA President and CEO Frank Keating yesterday challenged economist Paul Krugman's recent New York Times column that endorsed the proposed settlement between the state attorneys general and the five largest mortgage servicers, and also condemned policymakers who have criticized the proposal.

In a letter to the editor, Keating said policymakers are right to question both the substance and process of the proposal, which would fundamentally restructure the entire mortgage industry and essentially nullify contract law.

"[Mr. Krugman] presumes the parties to the settlement guilty and would, apparently without question, impose upon them by prosecutorial fiat new requirements and practices which undermine the very foundations of contract law," Keating wrote. "The result might provide short-term benefit to current troubled borrowers, but it would certainly harm everyone -- borrowers and lenders alike, in the long term."

"Policymakers who raise such questions are to be applauded -- they are doing their job," Keating concluded. Read ABA's letter to the editor. Read Krugman's column.

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