Well it had to happen.
With the headlines and angst not just on Wall Street but expressed at exit polls during the primaries we have had BEFORE this 'thing' became the gigantor of election year fears...we now have the candidates and congress 'doing something' about the sub prime crisis which threatens to to rob this economy of disposable income, and equity and bathe 2008 in a newer fear than Adam Gadahn's video stupidities. We will not be worrying about Al Qaeda, the MMA, Pakistan, and Ahamdinejad if every 8th house has a 'for sale' sign, and corporations buy nothing and create no new positions in order to conserve cash, I promise, you.
Millions (anyone have a real number, btw?) of americans are seriously delinquent (60 days plus?) on their sub prime mortgages. Congress and the candidates now feel they have to 'do something'. Whatever it is, it had better be a non zero sum solution. So far the fed has been lowering rates to keep injecting cash into the system, more cash = some more inflation - how much is anyone's real guess, but in the outer world, where perception rules, that still means 'we are cheapening the dollar', and the Al Saud get paid in value which is less than yesterday. Of course and as usual it's all wrong
since injecting cash does not cure lack of confidence, and more liquidity for american consumers might be the only thing to allow us to support the economy and keep affording the gasoline and the $$ flowing to the Al Saud so they can print more books about the fornicating, jew controlled kufrs that have to die anyway.
Nevermind that for moment. Here is the Financial Times on some legislative ideas.
Beyond the election-year rhetoric, most insiders who have stakes in the foreclosure mess, from bankruptcy lawyers and mortgage servicers to global investment banks, are keeping a close eye on Congress.
Specifically, they are watching the Emergency Home Ownership and Mortgage Equity Protection Act of 2007, a controversial proposal that was created by a compromise between Democrats on the House judiciary committee and Republican Steve Chabot of Ohio, who was the only Republican to vote in favour of the bill when it passed the committee late last year. The proposal, which House Speaker Nancy Pelosi has vowed to take up early this year, would allow homeowners to modify the mortgage of their primary residence in court under bankruptcy. Under current law, judges can only modify mortgages on second homes. Passage of the bill, Mr Chabot and Democratic sponsors say, could save hundreds of thousands of homeowners from foreclosure.
Mr Chabot’s support of the bankruptcy bill, which faces tough opposition from banking lobbyists, underscores the changing political current in Washington. Just three years ago, Mr Chabot was a strong advocate of sweeping bankruptcy legislation that limited protection and was hailed as a victory for business lobbyists and the Bush administration. Now, he is seeking to expand bankruptcy protection.
Some analysts say they believe that even the most conservative Republicans in Congress could support the legislation if it is narrowly targeted and will keep voters from losing their homes – even if it contradicts “free market” principles.
Well, well, right? Suppose we do this? You are now sitting in Citibank and 5% of your mortgages just legally were dropped back the levels that they were signed at (or less), instead of the ballooned rate. You are now missing x% of your planned cash for the what....year, 5 years, life of the mortgages? Well since the courts just became an agent of increasing the risk in mortgages, we all know what capitalism's real answer has always been to increased risk, don't we? Of course 'Citigroup' (we'll use them as the perceptive villain for everyone who joined with them) created the increased risk to begin with with their 'product'.
So we have Bush and Bernanke doing what the DEMS agree with, and we have the dems and repubs in congress creating a situation in which while the fed lowers rates to inject $$, the banks increase rates to make up for what the judges do to save homes for people who should NEVER have been sold mortgages, any more than a Mercedes. The major benefit aside from these people having homes, is that they can then pay the rest of their bills, and buy a washing machine or two.
Here's Hillary in NH...
Experts say voters generally oppose taxpayer-funded bail-outs, though they will also want to stop whole neighbourhoods from suffering under the weight of the subprime crisis. At a town hall meeting last week in Merrimack, New Hampshire, Hillary Clinton, the presidential candidate, was quick to point out in response to a question about personal responsibility that she had little sympathy for speculators in the housing market. But she conceded that the crisis could have a “cascading effect” on the economy that had to be stemmed, even if it meant that some who “should have known better” would be given relief. “Where we can intervene more quickly to prevent it [the economy] from falling off a cliff, we should do that,” she said.
In the meantime, none of this makes the other war any easier to fight or win.
Lobbyists who are familiar with the bill ( Emergency Home Ownership and Mortgage Equity Protection Act of 2007) say they believe it will pass the House, but it is unclear whether it will win approval in the Senate. The White House has not said it would fight the proposal, but proponents of the bill said privately that they believed the Bush administration would side with critics who claim it would have unintended consequences.
The Mortgage Bankers Association, which is fighting the proposal, says that if judges are allowed unilaterally to change terms of a mortgage contract lenders will face “new uncertainty” when valuing homes, increasing the interest rate on future mortgages.
However, supporters of the legislation, including the non-partisan Center for Responsible Lending, say the bill represents one of the simplest ways to help families trapped in “exploding” adjustable-rate mortgages in which interest payments increase rapidly.
What happens when a significant proportion of the homes in your neighborhood go up for sale? What happens when they don't sell? What happens when the value of the mortgage then exceeds the value of the house? Do you know anyone who has just sold a house, THEIR HOUSE, and then shows up at closing with a check?
If foreclosures are not stopped, NEIGHBORHOODS of responsible people will be devalued.
The credit market is already crushed unless you are rated as high as US Bonds are today, that is a market based on fear right now.
To restore confidence to the public, the bill must be passed. But we cannot lose sight of the fact that the excesses of the credit market in creating the subprime floating rate mortgage and the consumers they sold it to are the cause here. Typically in our society, when corporate excess occurs (such as price fixing, etc) the citizens find it compulsory to organize to protect themselves in the form of law.
I am very sorry to say, it's time to consider this, and study the issue with regard to this specific problem.
An america awash in foreclosed mortgages, and an economy paralyzed with lack of confidence and outright fear will not win this war.