The government makes the rules. The banks are in charge of the politicians. Therefore, the banks make the rules.
They may lose face here shortly, however, if they don't take full control of these things and start cashing in some big favors quick.
Get ready for some random HR XXXX bill or they will just stuff a fix inside of a random bill no one will read.
I usually ignore news and watch the market. I don't have the evidence yet, based on the market, that the broken titles are a problem for banks, yet, but I'll be watching for it. There are other reasons for increased caution too. Market breadth is very overbought, VIX is at unsustainable low levels, and Treasury yields rose substantially last week.
Barry Ritholtz, lawyer and money manager, feels the title issues will be resolved by judges applying the law of equity; in other words, judges won't give a free house to deadbeats, nor let banks off scot-free for massive screwups, since neither would be "equitable". Judges can restore sanity.
US law is being "bailed out" by English common law here. The law of equity is that old.