In a stunning bit of moronic populism, the sheriff of Cook County, Illinois, one Tom Dart, has taken it upon himself to cease evicting people from foreclosed properties. Basically, the good sheriff has decided to ignore valid court orders that require him to evict the tenants.
Dart’s foolish act will accomplish two things. It will make credit harder to get for landowners in Cook County, and it will further extend the mortgage securities crisis.
When banks lend money, they lend on a set of basic expectations. Among these expectations is that government officials will follow the law. When government officials change the rules midgame, i.e., ignore the rule of law, lenders flee the jurisdiction. Lenders cannot be certain that their investments will be protected and honored.
Additionally, now the holders of mortgage backed securities are looking at Dart’s illegal act and thinking “I wonder how much of the collateral for these mortgage backed securities I’ve got on my books is in Cook County, and how can I quantify this new ‘we ignore the rule of law’ risk?” Good luck assessing the market value of a product whose value is already suspect and is now entirely dependent on the whim of short-sighted government hacks.
So, full marks to sheriff Tom Dart for failing to comprehend the impact of his actions. Incompetence, populism and politics in Chicago. ‘Puter is shocked.