Tell Your Attorney General: Lower Principal on Underwater Mortgages and Create 1 Million Jobs Per Year!
The New Bottom Line released a report detailing a solution to the foreclosure crisis: The Win-Win Solution: How Fixing The Housing Crisis Will Create 1 Million Jobs details the outcome if banks were to lower the principal on all underwater mortgages to current market value:
■Create 1 million jobs every year -- This includes over 300,000 jobs in California, the state hit hardest by the financial crisis.
■Pump over $70 billion per year back into communities across the country for the next 30 years -- This includes $12 billion dollars per year in Florida, the second of the two states hit hardest by the foreclosure crisis.
■Save American families over $500 on average per month on mortgage payment
■Solve the foreclosure crisis once and for all
The 50 state Attorneys General have been investigating the big banks--JP Morgan Chase, Bank of America, and Wells Fargo--for massive mortgage fraud. But the settlement talks have been dragging on for months.
Tell your Attorney General: We urge you to take the courageous and much-needed public stand against the greed and selfishness exhibited by these large banks. Work with your us to hold the big banks accountable and to revitalize our communities and our states.
We'll deliver the petition to all Attorneys General, but we want to highlight each Attorney General's constituents so please include your state when signing.
We need a New Bottom Line that puts the interests of people ahead of huge corporate profits. Sign this petition to tell your Attorney General that any foreclosure settlement with banks must include principal reduction on all underwater mortgages to current market value.
1,977 SIGNATURES
GOAL: 3,000 signatures
http://www.newbottomline.com/tell_your_attorney_general_lower_interest_rates_on_under_water_mortgages_and_create_1_million_jobs
I know it would help everyone to some extent . Hate to be someone who has paid down my principal. I am a bit under water so it would be nice I would like to sell in the next few years.
JeffreyS. check out the map with the number of underwater mortages by state:
http://www.newbottomline.com/map_of_under_water_mortgages
CA and FL have the highest numbers.
Oh I know and the benefits would be wide spread even for the people who aren't under water.
Or.......
take the money that was used to 'bail-out' the financial institution for gambling with derivatives. Give an equal TARP payment divided over the population (works out to around 200k per living person) and allow the public to re-invigorate the market.
Or........
give the money to the banks, let them find another way to exploit us and collect interest on our money that the government lended them until they have enough liquidity to pay us our money back and manage to keep the interest.
What's the monthly gain on an APR around 2.8% when you have billions invested?
Quote from: FayeforCure on August 19, 2011, 05:24:10 PM
Tell Your Attorney General: Lower Principal on Underwater Mortgages and Create 1 Million Jobs Per Year!
The New Bottom Line released a report detailing a solution to the foreclosure crisis: The Win-Win Solution: How Fixing The Housing Crisis Will Create 1 Million Jobs details the outcome if banks were to lower the principal on all underwater mortgages to current market value:
■Create 1 million jobs every year -- This includes over 300,000 jobs in California, the state hit hardest by the financial crisis.
■Pump over $70 billion per year back into communities across the country for the next 30 years -- This includes $12 billion dollars per year in Florida, the second of the two states hit hardest by the foreclosure crisis.
■Save American families over $500 on average per month on mortgage payment
■Solve the foreclosure crisis once and for all
The 50 state Attorneys General have been investigating the big banks--JP Morgan Chase, Bank of America, and Wells Fargo--for massive mortgage fraud. But the settlement talks have been dragging on for months.
Tell your Attorney General: We urge you to take the courageous and much-needed public stand against the greed and selfishness exhibited by these large banks. Work with your us to hold the big banks accountable and to revitalize our communities and our states.
We'll deliver the petition to all Attorneys General, but we want to highlight each Attorney General's constituents so please include your state when signing.
We need a New Bottom Line that puts the interests of people ahead of huge corporate profits. Sign this petition to tell your Attorney General that any foreclosure settlement with banks must include principal reduction on all underwater mortgages to current market value.
1,977 SIGNATURES
GOAL: 3,000 signatures
http://www.newbottomline.com/tell_your_attorney_general_lower_interest_rates_on_under_water_mortgages_and_create_1_million_jobs
Dear AG,
I would like you to force a private company to reduce principle and interest of folks that made bad choices as they were forced to buy overpriced houses. If their house prices had gone up and they made a profit then they would have surely shared that with you.
These companies are BIG and BAD so it does not matter that I and many others have invested in them. They unfairly, are trying to make a profit, egads! We have arbitrarily decided that they are making too much.
I somehow evaded these awful capitalists and bought a house I could afford and put down enough money that I will not default. Besides I pay my obligations. But I would like pay less than I owe also. I have a car that is not worth what I paid for it so while you are at, it please call the dealership and tell them that I want the principle reduced.
By rewarding these bad decisions I am sure the buyers have learned there lessons and will never make another bad decision and will never be back here asking for another hand out.
BTW I have some terrible stock decisions that I may need you to make me whole on.
Regards, Morons
It's an awful idea.
Except that it is exactly what TARP was, but in support of Mortgage holders rather than Mortgagees.
If you are underwater: RUN (Your mortgage company has already robbed your children via the fed... don't even feel guilty)
Bailouts are for the rich and the poor... not the middle classes.
+1 BH
Bill, You are missing one point. The due diligence on all these bad loans was the lenders resposnibility, not the borrowers. They gave out billions in loans that should not have been given out. That activity was driven by greed, mostly on the part of the banks, who made hundreds of million up front in origination fees plus
all the money they collected on interest only loans. Many of the lenders were bailed out, by the gov and by mortgage insurance. The borrowers simply lost almost everything they had.
So it was all the lenders fault? I guess the majority of the population of this country is too stupid to figure out how much of a house they can afford? It's not rocket science. I can't even believe that someone would fully blame the lenders on this one, it's almost laughable.
So if I go to the bank tomorrow and ask for a loan and they don't verify my income or credit but give me the money, it's my fault? I want whatever it is you guys are smoking.
Oh I forgot, the borrowers held a gun to the lenders head and said give me the money or else, right? Is that what happened?
The lenders made two enormous errors:1 not doing due diligence and 2 not having the imagination to concieve that the collateral on the loan might go down in value.
Banks are owned by investors. They owe it to the investors to do due diliogence on the borrower. In millions of cases that was not done. The contract said "If I cant make the payments you get the house." Tell me where the borrower is at fault simply for asking for the loan.
I think we miss the point by assigning blame solely to debtors or lenders. It was a mixed bag. Many borrowers misrepresented income and/or believed their income to be more stable than turned out to be the case.
Most lender however, made loans, then repackaged the debt for sale to investors who believed in the ratings of those mortgage backed securities/derivatives.
I loan a person some money and collect a fee, then sell the "debt" to a third party. The debt is rated AAA by ratings agencies effectively owned (paid by) the originators of the loans.(Institutional banks were often leveraged 30/1, incidentally.) The loan originator is now in the black, with all the risk sold to others. As it always does, TSHTF. The people making bad loans, as well as AIG (insurer of bad loans) plus Fannie and Freddie get free money.
Tax dollars? Borrowed Dollars? Printed (devalued) money? It's all the same. Just know that those mad libs screaming about socializing risk while privatizing profits were on the mark. (Yes... You too, Faye)
NN yes but isn't it typical of business in America nowadays that the big corporate banks have their losses mitigated by the government and the individual is told "your on your own".
Quote from: JeffreyS on August 20, 2011, 10:09:22 PM
NN yes but isn't it typical of business in America nowadays that the big corporate banks have their losses mitigated by the government and the individual is told "your on your own".
But of course! Mom & pop, local biz, families & individuals in general no longer own the country, but the banks & giant corporations sure do though. Can't have them fail. Their money & influence goes a much longer way in Washington than Mom & Pop's & the rest of us pee-on's money does.
Oh, and if said individuals try to raise a stink, rage against the machine & walk away?? Yeah, that little system they've set up will eat them alive through trashed credit, garnished wages, lawsuits & all kinds of other fun stuff. All brought to you by the same banks that started the mess & got bailed out with taxpayer money.
We're all slaves.
Quote from: MusicMan on August 20, 2011, 09:52:48 PM
The lenders made two enormous errors:1 not doing due diligence and 2 not having the imagination to conceive that the collateral on the loan might go down in value.
A friend who is in the mortgage business openly talked about "liar loans" that mortgage companies were happy to give out to applicants without any proof of income.
Quote from: peestandingup on August 21, 2011, 08:46:15 AM
Quote from: JeffreyS on August 20, 2011, 10:09:22 PM
NN yes but isn't it typical of business in America nowadays that the big corporate banks have their losses mitigated by the government and the individual is told "your on your own".
But of course! Mom & pop, local biz, families & individuals in general no longer own the country, but the banks & giant corporations sure do though. Can't have them fail. Their money & influence goes a much longer way in Washington than Mom & Pop's & the rest of us pee-on's money does.
Oh, and if said individuals try to raise a stink, rage against the machine & walk away?? Yeah, that little system they've set up will eat them alive through trashed credit, garnished wages, lawsuits & all kinds of other fun stuff. All brought to you by the same banks that started the mess & got bailed out with taxpayer money.
We're all slaves.
Thank you, we have all become slaves to the system.
Mega Corporations (who run our government) want to privatize the profits, and socialize the losses.
Quote from: FayeforCure on August 21, 2011, 10:25:22 AM
Mega Corporations (who run our government) want to privatize the profits, and socialize the losses.
Large corporations can afford lobbyists in Washington. Small businesses, and individuals can't. Guess who writes the laws!
I have an advice for the People.
Watch V For Vendetta. Be inspired. Take BACK the government.
-Josh
Quote from: stephendare on August 20, 2011, 09:47:33 PM
Quote from: acme54321 on August 20, 2011, 09:32:32 PM
So it was all the lenders fault? I guess the majority of the population of this country is too stupid to figure out how much of a house they can afford? It's not rocket science. I can't even believe that someone would fully blame the lenders on this one, it's almost laughable.
So you loaned money to a person that you knew could never pay you back? And now you want to whine because of the unfairness of it all?
Maybe once. Then shame on the welcher.
But twice?
How about millions of times?
Im sorry, no sympathy. If they didnt have the sense that god gave a beetlebug and just kept pouring the money to people that they knew were deadbeats, then whose fault do you think it was, acme?
Why is it, literally-----according to you----- everyone else's fault except for the people who were responsible for loaning out other people's money for their own commissions and profit?
I never litterally ----- said it was everyone else's fault. Of course lenders were a huge part of the problem. The other part of the problem were the millions of people that took out debts they could not realistically pay back. It's not all home loans either, cars, boats, credit cards, etc add up fast too. Borrowers need to act responsibly as well.
So acme54321 the lenders "a huge part of the problem" (as you state) are bailed out by the government. The debtors "the other part of the problem"( as you state) should get screwed.
Am I understanding your corporate nanny position accurately?
Jeffrey, where did I ever say that the lenders should have been bailed out?
Quote from: acme54321 on August 22, 2011, 09:29:15 AM
Jeffrey, where did I ever say that the lenders should have been bailed out?
So then nobody gets bailed out and the economy crashes.
Government by no means should ever take corrective action to remedy economic ills (snark)
Ok, so everybody should get bailed out?
I don't want to sound like I know exactly how much bailing out we should do. I just don't like the bending over backward for the corporations(what actually happened) and the "should have known better" speech for the families.
Quote from: stephendare on August 22, 2011, 09:48:47 AM
Quote from: acme54321 on August 22, 2011, 09:29:15 AM
Jeffrey, where did I ever say that the lenders should have been bailed out?
Since you didnt say it, should everyone pretend that it didnt happen?
Yup, it's the stooooopid people vs the oh so smart mega-corporations.
If you keep dissing on the stooooopid people, you can avoid the real culprit of our economic woes.
Quote from: stephendare on August 22, 2011, 09:48:47 AM
Quote from: acme54321 on August 22, 2011, 09:29:15 AM
Jeffrey, where did I ever say that the lenders should have been bailed out?
Since you didnt say it, should everyone pretend that it didnt happen?
That would make about as much sense as lowering the principal on underwater mortgages.
Perhaps there should be a correlation between Banks that were bailed out and their debtors being made whole. I know Bush's bail outs came with no conditions but I could sleep fine at night if we put them on retroactively.
Going back and ready the OP brings up a question.
The idea is sound. But what vehicle gets us there from we are at today, and what repercussions would there be?
There is no benefit.
All this talk is great but back at post one it doesn't specify how this plan would be carried out. I don't think the attorney general can wave a wand and lower mortgage principles. So what steps would be taken to make it happen?
But using this cramdown theory, what's to stop all of the legit borrowers from getting the same benefit?
Honey, if we stop paying our mortgage and default on the loan, we'll qualify to restructure our mortgage on today's assessment. So the $75k we're underwater right now, don't worry about it. Take the check for the mortgage and go buy yourself a nice gold ring, I hear they're retaining their value pretty well these days.
So to do this "cramdown" procedure the owner would have to declare bankrupcy?
Quote from: stephendare on August 22, 2011, 10:27:40 AM
Quote from: acme54321 on August 22, 2011, 10:21:23 AM
Quote from: stephendare on August 22, 2011, 09:48:47 AM
Quote from: acme54321 on August 22, 2011, 09:29:15 AM
Jeffrey, where did I ever say that the lenders should have been bailed out?
Since you didnt say it, should everyone pretend that it didnt happen?
That would make about as much sense as lowering the principal on underwater mortgages.
ah.
So hypocrisy is the same as pragmatic fairness?
Thats a new one.
Acme. What would be the benefit of keeping millions of homes indebted many times more than their actual value?
Maybe I just don't understand your argument.
If a house is worth a hundred thousand dollars, and over a 20 year mortgage you are going to pay 250 thousand dollars for it, thats a pretty substantial profit as a return on investment.
But if the house is now only worth 40 thousand (100 thousand over at 20 year mortgage) what is the benefit of keeping the homeowners indebted for the full 250? Or even the 100k in cash?
Since we are being pragmatic... while not underwater... I have certainly lost a good bit of "on paper" equity. Please include me in this bailout as I would certainly have more money to spend on the economy if the government would give me back my equity... I will not sign the petition as written until it includes me and people like me...
BT, just save all of your old tax-notices. When you want to re-fi or sell, just throw that little piece of paper on the counter and demand that you get at least what it was worth in '07-'08 - or no deal!
I was planning on buying a new car, a boat, and a motorcycle (all american built) with my home equity. It certainly makes more sense to restore my equity so I can purchase the goods I was planning on purchasing.
But Nooooooooooo
They just want to limit this to those underwater. They would garner much more support if they would include me/us in this petition...
Sounds like you'll have to settle for a chinese made car, boat or motorcycle.
Quote from: stephendare on August 22, 2011, 10:27:40 AM
Acme. What would be the benefit of keeping millions of homes indebted many times more than their actual value?
Maybe I just don't understand your argument.
If a house is worth a hundred thousand dollars, and over a 20 year mortgage you are going to pay 250 thousand dollars for it, thats a pretty substantial profit as a return on investment.
But if the house is now only worth 40 thousand (100 thousand over at 20 year mortgage) what is the benefit of keeping the homeowners indebted for the full 250? Or even the 100k in cash?
The example that you've given above does appear to be a pretty substantial profit. Out of curiosity I went to an amortization spreadsheet and if I've worked it correctly, that correlates to an interest rate of over 11%. Someone may want to double check my math. Regardless of that, yes, you can make a tidy profit if you loan money on real estate after doing your due diligence.
But I think the question boils down to this: who should suffer when an investment goes bad? All parties to the transaction should suffer. The borrower loses their home, and the bank loses some of their capital since they made a poor decision. But in this post-bailout society we live in, the loss is spread among a bunch of people who had nothing to do with the transaction.
We already have a mechanism to deal with this situation, and as you mentioned in a subsequent post, it's called bankruptcy.
Be wary of changing the rules too much or you'll see the law of unintended consequences in action. If you want the lender to take all the risk (if the value of the property declines), but not be able to share on the upside (if the value of the property appreciates), then you're going to see a lot of banks get out of the lending business. One could argue that with all of the regulatory uncertainty we've seen over the past 3 years that a lot of the banks have already taken themselves out of the lending business.
Quote from: stephendare on August 20, 2011, 09:47:33 PM
So you loaned money to a person that you knew could never pay you back? And now you want to whine because of the unfairness of it all?
Maybe once. Then shame on the welcher.
But twice?
How about millions of times?
Im sorry, no sympathy. If they didnt have the sense that god gave a beetlebug and just kept pouring the money to people that they knew were deadbeats, then whose fault do you think it was, acme?
Why is it, literally-----according to you----- everyone else's fault except for the people who were responsible for loaning out other people's money for their own commissions and profit?
This scheme worked out fine as long as property values continued to increase. And I remember hearing a lot of brokers in the 2003-2006 years saying things like "oh yeah, mortgage your property up to the hilt, use other people's money, of course real estate will continue to appreciate - it's not like they're making any more land!" During those days, the bank really didn't care so much if the lender paid them back. They would just foreclose and then they could resell the property and they would be made whole.
As we've learned, there is plenty of blame to go around. The government, due to federal programs like the Community Reinvestment Act; greedy borrowers who wanted to live beyond their means; community activst groups who picketed and boycotted lenders unless they increased lending to unqualified applicants; greedy lenders who wanted to maximize returns; greedy mortgage brokers and managers who were bonused on how high they could jack up the interest rate - regardless of how likely it was that the borrower could pay.
But if the government going to bail out everyone who is to blame, then who is going to learn their lesson and stop doing these stupid things?
Quote from: JeffreyS on August 22, 2011, 10:32:07 AM
Perhaps there should be a correlation between Banks that were bailed out and their debtors being made whole. I know Bush's bail outs came with no conditions but I could sleep fine at night if we put them on retroactively.
I'm not comfortable with one side unilaterally changing the terms of a contract after the fact. I think that's a recipe for chaos in the financial markets. The government should have put conditions on the bailout at the time the agreement was made. Or better yet, they shouldn't have bailed the banks out to begin with.
Quote from: Ajax on August 22, 2011, 03:16:31 PM
Quote from: JeffreyS on August 22, 2011, 10:32:07 AM
Perhaps there should be a correlation between Banks that were bailed out and their debtors being made whole. I know Bush's bail outs came with no conditions but I could sleep fine at night if we put them on retroactively.
I'm not comfortable with one side unilaterally changing the terms of a contract after the fact. I think that's a recipe for chaos in the financial markets. The government should have put conditions on the bailout at the time the agreement was made. Or better yet, they shouldn't have bailed the banks out to begin with.
+1 I wonder if would not have been better, both morally and economically if we had let the investment banks fail like we did with Lehman Bros. and used the money spent on TARP to deal with the consequences rather than bailing out the banks.
Moral hazard is real. And the investment banks and hedge funds that were bailed out have gone right on doing what they did before.
Quote from: Dog Walker on August 22, 2011, 04:14:37 PM
Quote from: Ajax on August 22, 2011, 03:16:31 PM
Quote from: JeffreyS on August 22, 2011, 10:32:07 AM
Perhaps there should be a correlation between Banks that were bailed out and their debtors being made whole. I know Bush's bail outs came with no conditions but I could sleep fine at night if we put them on retroactively.
I'm not comfortable with one side unilaterally changing the terms of a contract after the fact. I think that's a recipe for chaos in the financial markets. The government should have put conditions on the bailout at the time the agreement was made. Or better yet, they shouldn't have bailed the banks out to begin with.
+1 I wonder if would not have been better, both morally and economically if we had let the investment banks fail like we did with Lehman Bros. and used the money spent on TARP to deal with the consequences rather than bailing out the banks.
Moral hazard is real. And the investment banks and hedge funds that were bailed out have gone right on doing what they did before.
It's because there were no strings attached..........for example why was the HOPE Act voluntary instead of required?
In Europe, when they did their bail-outs, they also mandated a more equitable compensation of the CEOs rather than the 300 times average worker level that is so prevalent in the US. (in Europe they consider executive pay at 50 times the average wage far more appropriate in lean times, and they are not afraid to mandatesuch because they have public financiang of campaigns)
See, if US government takes corrective action it needs to make sure that when it hands out money, there are strings attached that PREVENT business as usual.
US government is not exercising its oversight and accountability functions in accordance with what they were instructed by the mega-corporate lobbyists that fund their campaigns.
Quote from: Dog Walker on August 22, 2011, 04:14:37 PM
Quote from: Ajax on August 22, 2011, 03:16:31 PM
Quote from: JeffreyS on August 22, 2011, 10:32:07 AM
Perhaps there should be a correlation between Banks that were bailed out and their debtors being made whole. I know Bush's bail outs came with no conditions but I could sleep fine at night if we put them on retroactively.
I'm not comfortable with one side unilaterally changing the terms of a contract after the fact. I think that's a recipe for chaos in the financial markets. The government should have put conditions on the bailout at the time the agreement was made. Or better yet, they shouldn't have bailed the banks out to begin with.
+1 I wonder if would not have been better, both morally and economically if we had let the investment banks fail like we did with Lehman Bros. and used the money spent on TARP to deal with the consequences rather than bailing out the banks.
Moral hazard is real. And the investment banks and hedge funds that were bailed out have gone right on doing what they did before.
Agree with both posts. Other than I don't know if the TARP funds should have been spent at all.
The problem with letting them fail was not the real estate side it was the money markets. If they froze the Tarp Money would not have been able to keep the business of the world working. We just should have had strings. Lower principals and minimum small business lending requirements would have gone a long way.
Quote from: JeffreyS on August 22, 2011, 08:58:07 PM
The problem with letting them fail was not the real estate side it was the money markets. If they froze the Tarp Money would not have been able to keep the business of the world working. We just should have had strings. Lower principals and minimum small business lending requirements would have gone a long way.
Thank you JeffreyS. Just common sense!
A Domestic Marshall Plan: Forget Going "Big vs. Small," Instead, Go "Simple and Effective"
Posted: 8/31/11 07:11 PM ET
A Marshall Plan for America:
The president might begin by recalling for all of us that, from 1947 through 1951, the US spent $13B (5% of its GDP) rebuilding Europe. At that time the US debt was about the same percentage of GDP as it is today, but our parents and grandparents did not moan and groan that we could not afford it. And, that was on a different continent and included large populations (Germany and Italy) that were just at war with us. The Soviet Union was invited to be included in the aid -- but "Uncle" Joe Stalin preferred the leverage destitution provided him. (a la Stalin, we now proclim "austerity" for America...........how is that not a soviet approach?)
When the Marshall Plan concluded, output had increased by 35%. [One wonders if the rightwing has ever invented a story about why this "government spending" really did not work].
The US needs a domestic Marshall Plan for itself -- $700B over 4 years is about the same percent of GDP as $13B was in 1947.
Obama should chart his own course with clarity or else we will get:
multipoint plans, watered down pronouncements, and the perception of a visionless and rudderless society. When it is complicated, and confusing, the tactic of the rightwing --to deny everything from cigarette-smoking causing lung cancer to more heat-trapping gasses resulting in more heat being trapped -- is easy to create.
No one rallies, no one goes to the barricades, no one steps up to fight if they are uncertain or confused. Nor do droves of people rally to achieve a 1% improvement.
Clarity and certainty are required.
To do so, the president should focus on two and only two proposals, and they each must take account of perceived prior failures, i.e., they must be guarantees not incentives that rely on what side of the bed someone gets up on in the morning to determine if they will be acted upon.
The first is that the proposal must guarantee millions of jobs. The keys are guarantee and millions, not just one million. Without a guarantee, any incentive proposed will be sliced and diced for why it will not work, how much it will waste, who the winners and losers are, and so forth.
At the level of one million jobs, it will be considered OK, but insufficient. Four (4) million should be the minimum -- and recall, the WPA hired 4 million people in 4 months.
At this time, providing incentives for this or that investment will fall on deaf ears -- the American people need to know that several million new jobs are to be guaranteed. The simplest way to do this is in the roads, bridges, electric grid, retrofitting buildings, dams, sewage, water, school buildings -- collectively referred to as "infrastructure". No fewer than 4 million jobs should be guaranteed, either through engaging private companies or, if necessary, through a modern Works Progress Administration, directly hiring the workers.
A corollary of this approach is that it will become highly politically salable to tax the wealthy to pay for those millions of guaranteed jobs. The best economic argument is to get non-productive money transferred to productive -- i.e., the financial activities (i.e, "FAT") tax of 0.5% on financial markets transactions that would generate $100-150B annually and ending the Bush tax cuts for the wealthy, generating another $70B... or, if one prefers, improved enforcement can get some of the $350B in taxes that are owed, but not paid. Together, that is about the amount the domestic Marshall Plan requires.
There is also a potent political argument for this approach -- the financial industry's excesses played a major role in our collapse, the taxpayers bailed them out, it is fitting an proper for them to help bail out the country.
It is time the president gave voice to that sentiment, widely shared by the American people for the simple reason that it is true.
If the jobs are to be guaranteed, there is no even remotely credible argument that the proposal will not work to create them. Since almost all infrastructure work is, by definition, local, the value of the government supported endeavors will be immediately obvious to the entire country -- road by road, bridge by bridge, school by school, community by community.
Let them try to say that money taken from the "private sector" will result in no net job gain -- it will not pass the laugh test. Let them try to say that this is "socialism", I doubt they'd want to sustain that pitch when 4 million plus people are working again.
The second proposal the president should make is guaranteed mortgage modification. So long as housing remains depressed, so long as homeowners have to squirrel away money to make sure they can meet mortgage payments, so long as so many mortgages are underwater, the burst housing bubble will be a drag on the economy.
It is not suggested that the president, in his speech, go into all the details, but he should be clear about what is guaranteed to occur. [One thought is to tie banks' access to the Federal Reserve's loan facility to agreement to modify principal and interest on mortgages, providing the banks a pro rata share of profits when the homeowner sells].
That's it. Guaranteed jobs. Guaranteed mortgage modifications.
A domestic Marshall Plan. To rebuild America.
Of course, we will immediately hear all the reasons why none of this is a good idea.
Ignore them.
The American people would rally in droves behind these two guarantees.
By Paul Abrams, M.D., J.D., an entrepreneur who is currently a consultant in biotechnology, and chairs a bioremediation company.
He was formerly President, CEO and Director of one publicly- traded, and another privately-held, biotechnology company, inventor on 12 US patents, co-editor of two scientific books and has published more than 35 peer-reviewed articles. He has been contributor to several journals on issues facing the biotechnology industry and entrepreneurs, an invited speaker at trade and financial conferences, and has testified before Congress on these matters.
He serves as a Board member of the Washington Progress Alliance, the Women's Bioethics Project, the Apollo Alliance (Washington State) and the Economic Opportunity Institute.
He received doctorate degrees in medicine and in law, and a B.A.summa cum laude in Political Science & Economics, all from Yale University. He is a board-certified
QuoteThe rampant mortgage servicer abuse that has so strongly characterized the crisis, both inside and outside of HAMP, continues to go unpunished. There are no easy answers, but I believe that any government solution must contend with underwater mortgages (that is, mortgages where the amount of the outstanding principal owed exceeds the value of the home) and servicer accountability.
Today, CoreLogic estimates that there are 10.9 million underwater mortgages, or 22.5% of all outstanding loans.
Recovery will continue to be frustrated until there is a reasonable solution to this problem. Too many would-be employees are unable to move to find employment because they are chained to a house they cannot sell; too many homeowners understandably choose to walk away from their home rather than make payments without any hope of regaining equity (causing additional foreclosures and additional downward pressure on housing prices); and there are too many unaffordable mortgage payments based on too much outstanding principal.
There needs to be a recognition that many borrowers will never make the required payments on their underwater mortgages, and that the owners of these mortgages have already lost any meaningful chance of obtaining a full recovery of the outstanding principal. The sooner that this reality is recognized and addressed, the sooner a recovery can take hold. As such, an aggressive principal reduction program is necessary, and can possibly be accomplished through: (a) government subsidies (such as the SIGTARP recommendation that principal reduction be mandatory in HAMP when it is in the best interests of both the borrower and the investor), including potentially tapping the tens of billions of dollars of obligated but unlikely-to-be-used HAMP funds; and (b) compulsion through a meaningful settlement of the allegations of servicer fraud and abuse.
Unfortunately, the failure of the government's response to the foreclosure crisis to date gives little reason to hope that either of these potential solutions will soon come to pass. Treasury should have negotiated principal reduction right from the start, utilizing its TARP investments as leverage over the parent companies of the mortgage servicers. Instead, it incompetently administered an ineffective program that seems to have better served the banks than homeowners. At this point, it may prove difficult to even attract homeowners to yet another government program. Too many have suffered the experiences detailed in the GAO survey, and housing counselors describe a condition they call "HAMP fatigue," where borrowers just don't trust the government to help them anymore.
http://www.huffingtonpost.com/neil-barofsky/foreclosures-mortgage-crisis-_b_995922.html?page=1
QuoteAn intelligent dialogue in Congress these days is about as likely as a Lady Gaga presidency, but Levin and his colleagues, including the less optimistic Robert J. Shiller, are paid to generate ideas that matter, and that's what they did Thursday night. "The fact that we now have seen public protests," Levin said, "compels us to talk about the issue."
What's the right policy response to sustained anger in the streets over lack of jobs and a concentration of wealth that leaves out "the 99 percent?" Government has a strong role, five of the six agreed. But before we get too far, things could get much worse.
"We shouldn't have the idea that the next boom is right around the corner," said Shiller, Arthur M. Okun Professor of Economics , known for books such as "Irrational Exuberence," for the Case/Shiller housing price index and for identifying the housing bubble in 2003.
With 2 million families already thrown out of their houses, and 5 million more seriously delinquent on their mortgages, the threat of mass foreclosures is real, said John Geanakoplos, the James Tobin Professor of Economics. "That's when the riots are going to start," he said.
His idea calling for banks to forgive principal, not just lower interest rates on subprime loans, is not, he said, a moral hazard â€" a rewarding of risky behavior gone bad. That's because the forgiveness should happen for homeowners who are current on their payments, and borrowers who are not would lose remaining equity value.
http://articles.courant.com/2011-10-14/business/hc-haar-1015-20111014-9_1_housing-bubble-economics-ideas
I do not agree with the last part..........there is a reason people are behind on their mortgages...........and the majority wasn't due to homeowners' "risky behavior," rather it was due to faulty business practices of banks, compounded by a crashed economy with scarce jobs. The "it's your own fault" crowd don't realize they could easily be next.
QuoteEvery year we hear about big bank executives being awarded multi-million dollar bonuses, even while those same big banks crashed the economy.
Families, homeowners, and those of us looking for jobs are all struggling. But big banks continue to foreclose on families, withhold affordable credit, fund predatory payday lenders and refuse to pay their fair share of taxes. Now, this holiday season, big bank executives are projected to award themselves billions of dollars in bonuses.
It’s time to set them straight.
Sign this open letter today and tell Bank of America’s Brian Moynihan, JP Morgan Chase’s Jamie Dimon and Wells Fargo’s John Stumpf to forgo their multi-million dollar bonuses and invest in America IMMEDIATELY.
http://www.newbottomline.com/say_no_to_big_bank_executive_bonuses?utm_campaign=bonus_s&utm_medium=email&utm_source=bac
Big banks can help rebuild America by writing down principal balances for families who are underwater or facing foreclosure, lending to small businesses to get the economy moving again, and paying their fair share of taxes.
http://www.newbottomline.com/say_no_to_big_bank_executive_bonuses?utm_campaign=bonus_s&utm_medium=email&utm_source=bac
For perspective, the $143 billion in bonuses and compensation banks handed out last year could extend unemployment coverage for each of the 15 million unemployed workers in the United States by more than seven months. $143 billion could buy individual health insurance plans for 65 percent of the nation's uninsured, changing the lives of more than 29 million people in the process.
But big bank executives won’t act unless you demand it. We will soon deliver this letter and message to top big bank execs and board members across the country.
Sign the open letter to the big bank executives today and demand they forgo their huge bonuses.
Tell them that this money should go toward keeping families who are facing foreclosure or underwater in their homes. Towards providing quality loans to small businesses and families. Towards investing in communities, not just padding their pockets.
Thanks so much for your action,
Ian, Tracy, Ilana, and The New Bottom Line team
P.S. Another way to send a message to big banks is to stop letting them use our money. Click here for a video about breaking up with our banks and for resources to help move money out of big banks and into local credit unions.