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Obama Rejects Foreclosure Gate Bailout Bill
CNBC.com | October 07, 2010 | 09:41 AM EDT

If you were watching "Squawk Box" this morning, you probably heard Rick Santelli ask Mohamed El-Erianabout a mysterious interstate notary bill that might bail out banks such as GMAC,JP Morgan Chaseand Bank of Americafrom their foreclosure gate troubles.

At stake was the ability of homeowners to challenge foreclosure attempts by banks. Recently, several large banks have had to halt foreclosure proceedings in many states when it emerged that their loan officers had taken short-cuts to speed foreclosures.

Ordinarily, banks are able to get a quickie foreclosure through the courts by having officers swear out statements claiming they have personal knowledge of the details of the loans and the delinquencies of borrowers. But it has now emerged that loan officers at some banks were just signing the statements kicked out by a computer without having reviewed the loan materials.

Basically, the banks gave liar loans and now they are trying to push through liar foreclosures.

El-Erian had never heard of the bill, which is formally called " The Interstate Notarization Act of 2010." Almost no one has, despite the fact that it has been proposed at least twice in Congress. It passed without any public debate on the final day the Senate was in session before recess.

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