Chicago-Style Spin

The face of "Chicago-style" politics may have broken the law!

No, I'm not talking about Rod Blagojevich - the governor who tried to sell Barack Obama's Senate seat...

I am talking about another well-known Democrat -- the President's former advisor Rahm Emanuel, who now faces accusations his plan to rescue Chicago's ailing housing market may be against the law...

Federal regulators are suing the former white house advisor..

Here's the back story.

Chicago has become over-run with vacant foreclosed properties, many of which have become magnets for gangs, drugs and other crimes.

The city spent more than 15 million dollars in 2010 alone dealing with these vacant buildings.

So Emanuel and the city council came up with a plan!

No, not working to move foreclosures along faster - but instead...

The city is forcing banks to keep up these foreclosed houses by mowing lawns, shoveling snow, boarding up windows....

They will have to pay a 500 dollar fee to register a building and then maintain it.

If not, there will be a thousand dollar fine for each day the home is not kept up to city standards!

But the banks claim - this is not their role.

And there's also this: the home may be in foreclosure, but that does not mean the banks own the home...

Last time I checked, it is still illegal to enter someone else's private home!

So in many cases banks' hands are tied...

The other major issue is many of these vacant homes are on the books of Fannie Mae and Freddie Mac...

These are the federal mortgage giants backed by 151 billion dollars in taxpayer money!

So think about it - the fees in many cases will have to be paid by taxpayers because the loans are owned by Fannie Mae and Freddie Mac -- just what you wanted as a late Christmas gift, right?

More of your money going to these two failed federal mortgage companies!...

That's where the legal question comes in - the Federal Housing Finance Agency is suing Chicago saying a city agency can't supervise a federal agency.

The mayor says the feds don't have a case. But now it's up to a judge to decide.

But here's a common sense idea: instead of holding taxpayers responsible for foreclosures it would be better to process foreclosures faster and speed the market to recovery.

Right now it takes nearly a year to process a single foreclosure. What's more raising fees on banks will hurt small lenders and send borrowing costs through the roof.

My advice: there's nothing in this plan to recommend it -- deep six it -- and the Chicago style politics that go with it!