The lead article in today’s New York Times, “$26 Billion Deal is Said to be Set for Homeowners,” describes some welcome relief to underwater homeowners and those who have already been foreclosed upon, often by an illegal banking process called robo-signing.

The agreement includes five major banks: JP Morgan Chase, Bank of America, Wells Fargo, Ally Financial and Citigroup, but does not include mortgages serviced by Fannie Mae and Freddie Mac, the two government agencies many blame for the housing collapse.

Still, it is something. Up to one million people will be helped with reduction of their principal, and 750,000 people who have already been foreclosed upon will receive $2,000 checks, admittedly a paltry sum compared to the value of the homes they lost. Still, the average benefit per homeowner is estimated to be about $20,000, and economic experts note that even though it seems to be a pittance compared to the breadth of the problem, even a small effort to clear the housing stock can create a snowball effect.

The award grew out of an investigation by the 50 state attorneys general, and they preserve the right to prosecute banks on other matters including criminal abuses. Of course, the Republicans will probably denounce it because it does not fit with their “pure” version of capitalism, but that just shows their lack of compassion and willingness to put ideology ahead of people.

The lead story in today’s New York Times, “Justice Inquiry is Said to Focus on S&P Ratings,” describes a business environment filled with inherent contradictions, conflict of interest and corruption. In addition to an investigation by the Justice Department, the Securities and Exchange Commission is also looking into possible malfeasance by Standards and Poors (S&P), and both inquiries were started before the debt ceiling debacle gained full steam in Washington.

Apparently, it is not unusual for the entitities being rated by S&P to pay in advance for that rating, and this situation causes an obvious conflict of interest. The fees can reach as high as hundreds of thousands of dollars. Of course, the ratings agencies, which includes Moody’s and Fitch as well as S&P, first gained notoriety for their inability to predict the housing market crash that set off the financial crisis in 2008 that we are still recovering from. And, most notably, they all ranked mortgage bonds and the related collateralized debt obligations as possessing a AAA rating.

The recent downgrade of U.S. Treasury bonds by S&P, of course, brings much more prominence to this story. But so does the lack of accountability of any financial organization for the financial crash we all experienced.

The lead article in today’s New York Times, “Federal Retreat on Bigger Loans Rattles Housing,” shows how the government has artificially propped up the housing market, first with an $8,000 tax credit for new homebuyers and more recently with Fannie Mae guaranteeing loans. These guarantees are now being withdrawn for more expensive dwellings — there is no right to live in a $750,000 home — and the housing market is about to swoon into another depression as a result.

Housing prices have gone down 7.5 percent, and most sales these days are from foreclosures. New home construction has almost ground to a halt, and one wonders whether the housing market will drag the whole economy back into a recession like it did the last time.

In any case, new home loans are going to become more stringent in terms of their availability, conditions and rates. One can only hope that the rest of the economy has become resilient enough to survive this new downdraft in housing conditions. The Mortgage Bankers Association, of course, opposes this withdrawal of government guarantees, and, if things get really bad, perhaps the government will change its mind.

In effect, this new policy represents a test case of the housing market, without its more recent supports, to see whether or not it truly is strong enough to stand on its own.

The lead story in today’s New York Times, “Document Flaws Lead to Turmoil on Foreclosures,” demonstrates the continued impact of the housing market on our economic recovery. It describes the approach to foreclosures in the last year as akin to an automobile assembly line, an approach that has led to legal difficulties with some of the home repossessions.

Apparently, lawyers in several cases failed to secure the necessary affidavits, and the new concern about cutting corners has led a major title insurance company to stop insuring titles to new owners of homes foreclosed upon by GMAC Mortgage, a major lender.

There is a silver lining to the story however as the increased care taken prior to executing evictions will reduce the overall number of foreclosed homes available for repossesion and lead to increased stability in the housing market. In addition, the time delay between defaulting on a mortgage and actual eviction will give distressed homeowners more time to raise the money needed to resume payments.

In fact, the new difficulties and requirements in the foreclosure process — the need to follow proper legal procedure, secure affidavits, etc. — may actually spur a recovery in the real estate market. That’s something we would all hope to see. You can’t handle people’s lives like an automobile assembly line.

The lead article in today’s New York Times is titled, “U.S. Loan Effort is Seen as Adding to Housing Woes.” It describes potentially negative fallout from President Obama’s program to protect homeowners from foreclosure.

The article notes that the $75 billion program, “Making Home Affordable,” may be delaying the inevitable. By temporarily lowering mortgage payments for troubled homeowners, it may just be postoning a day of reckoning. Homeowners who can’t really afford their mortgages will eventually need to make the original payments, and meanwhile, they are wasting their money instead of moving into a rental situation they can afford. In addition, the program may be having the same effect on banks who delay admitting the negative effect of these loans in their portfolio.

In my opinion, the article is unduly critical. By providing temporary relief, the Obama program holds out the hope of a change in circumstance in the financial situation of these homeowners. The change could be as simple as procuring a new job as the economy recovers or finding a new revenue stream. Homeowners in a precarious situation should also be given time to work out new living arrangements or a safe place for their kids to reside should a more serious homeless situation loom.

Even if only a small percentage of homeowners are able to bailout from their current situation, is that too large a price to pay for their rescue?

“In military terms, we are being pillaged.” Discrimination in lending to minorities by NYC banks resulted in this shocking quote from an African-American councilman in Queens in today’s lead story in The New York Times.

The current rise in foreclosures in New York is hitting Blacks and Latinos the hardest because in 2005 and 2006 minority borrowers received subprime mortgages when their credit scores should have qualified them for conventional ones.

The article, “Minorities Hit Hardest as New York Foreclosures Rise,”  grabs you even more with its subtitle, “Middle Class Suffers — Neighborhoods are Devastated.” It differs from the normal lead stories you see in The New York Times because it provides gripping case studies of average minority homeowners facing foreclosure or already evicted.

If you needed to be convinced, here’s a gripping account of why banks should be regulated in their lending and credit practices. The article describes real people, conscientious middle-class minority homeowners, who have been caught up in our current financial tragedy.

Whole neighborhoods have been affected by the foreclosure crisis, and, according to the article, things are starting to get worse. The downward spiral has led to an increase in violence and the conversion of whole communities from homeownership back to rentals. It also predicts bulldozing of blocks of houses and a cycle of disinvestment.

“The foreclosure storm shows few signs of abating,” concludes this troubling piece. If ever a situation called out for government intervention, this one does. We can only hope President Obama’s programs will ameliorate the problem. Maybe, NYC and New York State agencies should become involved as well.

Today’s lead story in The New York Times is titled, “Showdown Seen Between Banks and Regulators.” It describes the increasing tension between banks and regulators regarding the terms bank had agreed upon when they accepted bailout money from the government.

The story looks at three areas of tension. One, banks who want to pay back the loaned money are refusing to include the premium required when they accepted it.

Two, banks are refusing to clear “toxic assets,” e.g., mortgage derivatives, off their books because it will solidify their loss. They want to value these toxic assets at 91 cents on the dollar when no investor is willing to pay anywhere near that amount, even with support from the U.S. government.

And three, banks are resisting “stress tests” because they fear that failure will cause the government to insist on management changes or merger with stronger institutions.

This is just the kind of publicity that banks don’t need. Already vilified by the American people, they are now compounding (no pun intended) their difficulties by refusing to comply with agreements they made when they accepted taxpayer funds. And a refusal to admit real losses on mortgage-backed securities shows their selfishness at a time when sacrifice has been demanded by everyone else due to the poor economy.

Banks may know a lot about money, but they need to learn a lot more about honesty and public relations.

Today’s lead story in The New York Times is titled, “Toxic Asset Plan Foresees Big Subsidies for Investors.” It describes the new plan by the Treasury Department to address the initial cause of our current recession, the troubled mortgages held by banks.

The plan involves a “public-private partnership” to encourage investors to take a risk and buy some of the bad loans on bank balance sheets. The assets will be auctioned to the highest bidder to hold down costs.

The central problem, as I understand it from the article, is that currently investors are willing to pay 30 cents on the dollar to purchase these assets, mostly commercial and residential mortgages, but banks don’t want to let them go for less than 60 cents because otherwise, they would have to accept huge permanent losses.

There are three components to Obama’s plan: 1) The FDIC will create investment partnerships and loan about 85 percent of the money needed to purchase the assets from banks, 2) The Treasury will create five investment management firms to match private money used, 3) The Treasury will expand lending through the Term Asset-Backed Secure Lending Facility.

Confused? The article gets more complicated in the continuation. For any one who sweats it out and reads the story to the end, there is an ominous note in the last paragraph. The economy is continuing to decline, and financial institutions are continuing to fail. Federal regulators had to take over two of the largest wholesale credit unions on Friday: the U.S. Central Federal Credit Union and the Western Corporate Federal Credit Union.

Today’s lead story in The New York Times was titled, “Financial Fraud Rises as Target for Prosecutors.” The article predicted a slew of prosecutions of loan processors, mortgage brokers and bank officials and detailed actions in several states as well as a plan for increased enforcement by President Obama.

While financial fraud is despicable, and leaves many innocent victims whose life savings have been wiped out, it’s important to maintain some perspective. There are many legitimate executives in these industries, and while they should be held to a strict standard, it is patently unfair to react to the crimes of a small number by placing everyone at increased risk.

The mortgage industry is no different from other fields where a small number of bad apples give everyone else a bad name. Politics comes to mind. So does plumbing.

It may be a little extreme, but in the French Revolution a similar wave of emotion swept the land, and all the nobles were led off to the guillotine. Justice in the United States has been noteworthy because of its fair and impartial rule of law, a rule supposed to affect everyone equally. Everyone is entitled to answer the charges against them and receive a trial by their peers.

So while many people would cheer at the thought of financial executives being led off in handcuffs, that’s not the way things should work in the United States.

The lead New York Times story today was “U.S. Sets Big Incentives to Head Off Foreclosures.” President Obama’s program was described as the largest undertaking of its kind since the Depression, and I found it revealing that the previous Bush administration efforts were entirely voluntary.

That fits entirely with the Bush worldview favoring the rich and tone deaf to the needs of working families.

An interesting side note in the story observed that lenders would be eager to see the program succeed because legislation being developed in the House of Representatives was far more punitive, giving judges the authority to mandate new mortgage terms. Lenders want to avoid this like the plague.

President Obama’s program contains common-sense limitations to avoid its misuse for non-essential purposes. Real estate investors can’t use it for a second or third home, and there is a cap on the size of the mortgage eligible so people living in mansions can’t benefit from any loopholes.

The program focuses on lowering the monthly payment to a range between 31 and 38 percent of a mortgage holder’s gross income by lowering interest rates to two percent, compared to the current level of about five percent.

The mandatory part of the program is simple. If lowering the interest rate costs the lender less than the cost of foreclosure, the terms of the mortgage must be renegotiated.

I’m encouraged by the breadth and logical nature of the program. This President knows what he’s doing.