Make Banks PAY for Housing Foreclosure Fiasco
It’ll never happen, of course. But there’s actually a bill in the California legislature that’s attempting to do this. The debate should be interesting. Can’t wait to hear what sort of talking points the banks’ legislative prostitutes will come up with.
Twenty percent of all of America’s foreclosures have been in California. In the past three years, 1.2 million California residents have lost their homes. And that number is expected to go above 2 million by the end of next year. More than one third of all California mortgages are under water. The resulting loss in property values will cost California $3.8 billion in lost property tax revenue.
Assemblyman Bob Blumenfield has introduced the Foreclosure Mitigation Fee (AB 935). This bill would establish a $20,000 fine on banks for each foreclosure.
This would raise $12 billion, which would go exclusively toward reimbursing local communities for their financial devastation.
The author of this article — Peter Dreier — says:
“Bankers pushed homeowners into high-cost loans they couldn't afford. They engaged in deceptive and often illegal activities, like not informing consumers that they qualified for conventional loans, tricking them into more costly and risky subprime mortgages. Wall Street banks bundled these risky loans into ‘mortgage backed securities’ that were given the seal-of-approval of ratings agencies (Moody's and Standard & Poor), and then sold them to foreign governments, pension funds and other unwitting investors.”
Personally I think this bill should be more of a scalpel than a bludgeon. Obviously some homeowners were foreclosed because of their own negligence and irresponsibility; and not all home loans were based on sleaze and trickery. I’d rather squeeze that $12 billion out of the bankers who were actually guilty of the above-mention practices. And the sleazebags who “streamlined” their foreclosure process — using robo-signers, “neglecting” to inform a homeowner that they were starting foreclosure proceedings on his/her home — should be fined heavily AND jailed.
It’s obvious why that will never happen, of course; and why this bill doesn’t stand a chance. Our entire government is owned and operated by Wall Street and a few other powerful industries.
But even if nothing can be done — where’s the outrage?