$700 Billion Wall Street Handout Hasn’t Helped the Housing Crisis
As most of us predicted, that $700 billion gift basket to Wall Street executives — with no strings attached — hasn’t done much to counteract the tsunami of home foreclosures. Nearly two and a half million foreclosures are expected during this coming year.
Fortunately, there are only a few hundred people in America who actually thought this $700 billion handout would make any difference. Unfortunately — they’re all members of Congress.
But we shouldn’t be too harsh with our congressional prostitutes. Nobody thinks very clearly when they’re assuming the Congressman’s Pose™ — 1. Bend over; 2. Clasp hands firmly around the ankles; 3. Hold that position while being ravaged by one lobbyist after another.
Federal Reserve Chairman Ben Bernanke is calling for more government action to help stem the foreclosures, which are causing a chain reaction throughout the economy. Obama wants to use a “significant portion” of the $700 billion bailout money to help homeowners. He said: “The deteriorating assets in the financial markets are rooted in the deterioration of people being able to pay their mortgages and stay in their homes.”
Unfortunately, Treasury Secretary Henry Paulson still thinks saving Wall Street CEOs’ yachts and vacation homes is a higher priority than helping the lowly riffraff to keep their homes.
Another way to keep people in their homes — and thus help the economy — is to allow bankruptcy judges to modify the terms of people's mortgages. Three times in the past year, legislation has been introduced that would make this allowance. And all three times this legislation has been defeated (see above-mentioned prostitutes).
Next month, if fewer legislators are locked into the Congressman’s Pose™, maybe this change can happen.
While our “leaders” continue to dither, there are steps YOU can take to keep the foreclosure crisis from wrecking Your Neighborhood.
When a property is foreclosed, neighbors can find out which bank owns that property and then put pressure on the bank. “Persuade” them to hire a property management company to fix up and maintain the property so it won’t blight the rest of the neighborhood. This might require repeated calls to the bank’s foreclosure department. This is even more effective if one or more of these neighbors has an account with that bank; they can threaten to take their business elsewhere.
If your local bank isn’t interested in what some lowly “neighborhood” group thinks, sic the local Building Department on them. The bank won’t want to tangle with the code enforcement division.
cross-posted at Bring It On!
posted by Tom Harper @ 5:37 PM
12 Comments:
Your keen description of the congressional decision process made me laugh out loud for real.
True, us MAIN STREET commoners knew this was a farce, a waste, and a huge butt kissing to the rich. Now it has failed, and guess who has to deal with it--we do.
I initially supported the effort to shore up the financial industry so credit wouldn't dry up. I'm disgusted and outraged with the way it has gone.
I think the government should impose a nationwide moratorium on foreclosures, then sit down with banks and tell them they will do the required research and case-by-case work required to make most of the failed mortgage deals work. Or else risk being nationalized the hell out of business — with the first order from the new management being that the banks' directors and top executives no longer have jobs there.
I suspect that would get things moving down the right path, without any more billions being squandered on the SOB's.
What cracks me up is that the banks are asking for help but don't want to meet anyone halfway. the perfect example is refusing to modify the mortgages. They'll take all our money via this bailout then kick us out of our homes. What really is annoying to me is that 700 million is old news. there are more plans to dish out more money to the tune of a few hundred MORE billion. Now that this door is open Tom, it's pretty much a never ending shakedown. This will go on and on for a while and it blows.
Enemy: Yup, Wall Street gets a huge handout, with no strings attached, and us lowly commoners get stuck with the bill.
SW: I reluctantly supported the bailout at first, just because of all the fearmongering rhetoric about "the global economy will collapse if we don't do this Right Now!" Maybe it was necessary, but there should have been a firm deal with clearly written conditions. I like your solution. It's not too late to do that (we'll probably have to wait 'til January) and that's what we need to do.
Ricardo: That's exactly it, they want almost a trillion dollars just handed to them by the taxpayers, with no commitment in return. Somehow that qualifies as "free enterprise" (??)
But any suggestion of using some of that bailout money for lowly homeowners, and these same Wall Street beggars yell "Socialist! Commie!"
Go figure.
Socialism for me but not for thee. Sums up Wall Street.
Randal: Yup, a nanny state for Wall Street; bootstraps for the rest of us.
Nothing changes until the bottom comes to housing. If Chimpy hadn't been so interested in transferring the rest of the nation's wealth to the rich, someone may have caught that.
People are just stupid. They piss and moan when someone talks of rescuing homeowners, yet if the homeowners AREN'T rescued, THEIR OWN assets will continue to lose value. People don't think that automakers should be helped to avoid bankruptcy, never thinking what THEY will be left on the hook for when the pension funds are closed out.
Ridiculous.
JR: Yup, the mass stupidity and shortsightedness is just unreal. Too many people just don't grasp that there comes a point where helping other people benefits everybody. And yet these same people don't object when a billionaire gets a government handout.
With that trademark on the Congressmen's Pose you're sure to make a few brazilian dollars come time for the next summer Olympics. Gymnasts will be clammoring to use it! ;-)
I think modifying mortgage terms are the best fix at this point in the game. It seems so simple. I'm not sure what the big fuckin' deal is with it. Everyone loses in a foreclosure - banks and homeowners. I like SW Anderson's idea on a moratorium on foreclosures.
As for the first bailout - I also reluctantly supported it. I supported it in hopes there were people way smarter than I making the decisions and considering the range of ramifications that would result / not result from the bailout.
Carlos: The biggest advantage to re-negotiating these mortgages is -- it doesn't cost taxpayers a cent (according to the linked article).
Or maybe that's another reason for Congress to be against it. It doesn't come out of taxpayers' pockets, AND it only helps the middle class riffraff, those peons who don't contribute to congressional re-election campaigns. That's 2 strikes.
I am probably in SW Andersons corner here. At first it seemed like the smart move. But the knee jerk way they went about it made me realize that our leadership still leads with poorly thought out reactive spontaneity instead of proactive leadership built upon serious understanding of the problems.
With a whole new ball game coming in Jan. maybe that will change. But will it come in time to make a difference? And will they get it right?
It makes no sense to me for the banks to be booting people out. They will never recover their money in full that way. Just so much about this makes no sense and now even less so given our governments poor response.
MRM: Yup, I think that's the only solution. If an industry will collapse without this bailout money, then we pretty much have no choice. But this money needs to be tied in with regulations and ironclad agreements to make sure the company does everything possible to turn themselves around.
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