Defeating Homeowners: A Pyrrhic Victory for the Bankers
In my last post, I argued that the United States is now a bank-owned state. As if to prove my point, the banks used their power over 12 Democratic members of the Senate to defeat Senator Durbin's "Helping Families Save Their Homes in Bankruptcy" amendment. And they financed the lobbying of taxpayer representatives with some of the billions of bail-out dollars provided by - taxpayers.
This was a defeat for American democracy. It represented a failure of senators to represent their constituents, honor the constitution and 'establish justice, insure domestic tranquility and promote the general welfare of the American people. But while it was a defeat for democracy, it was a Pyrrhic victory for the bankers. One more such victory over Congress and the White House, and the bankers will be facing ruin.
Why? Property makes up most of the collateral backing up toxic assets owned by bankers. The upward spiral of foreclosures places downward pressure on property prices - the banks' collateral. With falling collateral values, bank debts rise and become unpayable - forcing even more financial institutions into bankruptcy.
American homeowners - both those facing foreclosure and their neighbors - need a floor to be placed under falling house prices, for obvious reasons. Realty companies need a floor to be placed under falling house prices. The economy needs a floor to be placed under falling house prices. Above all bankers need a floor to be placed under their most important collateral - house prices.
The market will not stop house prices falling. So government has to intervene. Not just to save the homeowners, but also to save banks, because the banking system is still at risk of systemic failure.
The best way to protect the banks is via the route proposed by Senator Durbin. By managing bankruptcy law in such a way as to keep homeowners from forced sales of their homes, or from defaulting on their mortgages. In other words, by using bankruptcy law to place a floor under falling house prices.
Be sure, this route will cost American taxpayers a lot less than another bailout of the banks.
The bankers and their lobbyists on the Hill just did not get this. They may be voraciously greedy and anti-democratic, but, ironically, they are not pursuing their own best interests. By defeating Senator Durbin's amendment, they are voting for more foreclosures, more bankruptcies and more bank failures.
In other words, they are like turkeys voting for Thanksgiving.
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Easy to figure out if you have ever been a degenerate. Thoughts they might be having:
This time it will be different. If I was entirely wrong, I'd have lost it all already.
Add to that the twisted rationalization that one's efforts are contributing to the greater good through consumer confidence, and you might convince yourself that gravity itself might cease to exist before we hit pavement.
We don't have time or resources to fix or replace the old jalopy economy. Our job is just to spray some ether into the dang thing to get it going. After all, It, not we ourselves determine our destiny and our kids' future.
Denial economics from the hallowed rooms of money anonymous.
It takes one to know one.
WE DO NEED A BUST THE BANK DAY, PULL YUR MONEY OUT AND TAKE IT TO A CREDIT UNION OR A REGIONAL BANK,
FOR GET CITI, BANK OF AMERICA AND THE LIKE, SHRINK BK DOWN TOT HE BB&T'S ETC OF OUR NATION AND ESPECIALLY THE CREDIT UNIONS, TAKE YOUR MONEY THERE IN WHEEL BARRELS IF YOU HAVE TO.
i am so tired of people in power doing our tax payers in for the pure purpose of greed,.
The Congress by design and custom are the servants to the wealthy and powerful banks.
The wealthy and powerful banks operate autonomously and with impunity.The banks have no fear of
reprisal from their mortgage borrower since the Congress has never legislated any laws or regulations
to permit the borrwer to have a voice so to speak.
What has happened to day in this place at this time will happen again and again because the wealthy and the powerful will never permit the borrower to have the legal defense to contest, object or question the unethical behavior of their mortgage holder.The average person cannot afford the creativity of a qualified attorney to speak for them. The Congress on its knees will not legislate in favor of the borrower to have a voice of protection within the same regulatory system that the federally chartered bank lends its money.
The Office of Thrift Supervision stated in writing December 19,2006 that they would not help me since Congress has never passed any Federal Consumer Banking Regulations.
I cannot speak for the millions in foreclosure or those who have been through foreclosure because I am one of them. The Bankers have stolen my past and made my limited my future with the approval of the Congress.
Michael LittleBig - Cleveland Ohio 5-6-2009
there has never been anyhelp for distressed homeowners, the banks beat your up and give you terms you cannto ever hope to pay, a friend of mid wne tto negotiate withthe bank, tey told her, send in 1000.00 now, and you mortage will go up by 300.00 for the next 12 months, and next year at this time we need an additional 2000.00 to brign your acct out of arrearages, includeing our attorney fees..
either do this or we will foreclose,
her other option take that 1,000 to an attorney and file for chapter 13 bankruptcy protection.
it is the only reason she has her home today after an unexpected layoff at her job with Wachovia Bank.
her incoem went from 50,000 to 30,000 after 4 months unemployed.
she now makes the regular mortgage payment and the arrearage is being paid thru the court, guess what, it is a double payment almost....and a struggle all the way, SOME RELIEF WOULD HAVE BEEN APPRECIATED, you know re negotiate the mortgage, for a better payment, so the customer can have somethign left over for other obligations, instead the banks want it all all our future tax dollars and all the money we make today
to mjtaylor22,
The majority of our citizens who have mortgages are unaware that if a serious problem or
breach occurs whereby the Bank does not or will not address the issues that the borrower has no protection or right to be heard. The average person cannot afford a creative money grabbing hourly rated attorney, who by the way has to have experience in real estate,banking, federal,state,forclosure laws and regulations.
You should note that NO ONE controls the bank. The bank answers to no one.
The borrowers only true protection is at this point bankruptcy-Chapter 7.
The Banks do not even have to honnor or participate in any government programs.
The Congress in the US, the people that you and I elect for lack of a better term are watching the banks rape their customers.
If you doubt what I say, it is simple to prove, do the research, it all on the internet in black and white.
Been there lost my home. My two elected Ohio Senator Brown and Latourette had the guts to
tell the Office of Thrift Supervision to back off from closing AmTrust Bank. This Bank is the Bank from hell-again google AmTrust Bank and lawsuits or foreclosures.
Bennet, Colorado
I won't forget.
At the risk of sounding crass, folks expects banks to be "fair" to them by increasing their risk profile, yet all those delinquent in their payments are not being fair to banks or other clientele. The rest of us absorb the cost.
I'll probably be accused of being insenstive, but therein lies the fallacy, - banks attract less sympathy because they are insentient.
The alternative to mortgages is soviet style housing projects. But remember, the fancy folks had those dachas.
Anyone for commues?
Have so many forgotten the timeless wisdom of former speaker of the houseThomas P. (Skip) O'Neill (D) of Massachusetts who said "all politics is local." That means, an elected representative has to represent the interests and attitudes of his or her district or state if he or she wants to be reelected. Just because a politician is elected as a Democrat does not mean that he or she is going to toe a line set by other Democrats. Have so many forgotten the days when southern Democrats' voting caused northern Democrats to say the southerners "weren't Democrats." Senator Specter has changed parties, but that doesn't mean he will toe the progressive line. Those who are careful to represent their constituents stay in office. Senators Roman Hruska of Nebraska and Strom Thurmond of South Carolina come immediately to mind. Successful politicians know how their constituents feel; those who succumb to hubris and ignore their constituents don't stay in office. So, just because the Dems are in a majority now, doesn't mean everything the leadship wants is going to be rubber stamped.
"In my last post, I argued that the United States is now a bank-owned state."
I don't know about that, but I'd like someone to draw a diagram of the power structure of the U.S. as I'm not too clear how it works.
"The market will not stop house prices falling. So government has to intervene."
I disagree on both. Housing should be one segment that should be left to free-market, and it's far from that now.
Falling house prices is generally seen as a bad thing. It's not.
In the housing market itself, buyers benefit, sellers don't. (Sellers moving up do benefit).
In the money side of the market, everyone benefits from rising house prices. That's what fueled the bubble. Remove risk, or ignore risk, and there's no concern for consequences.
"... bank-owned state ..."?
There's no such thing - sounds like an inchoate re-definition of capitalsim.
Better than state owned banks
Speaking of those TARP funds....Do we know who has them YET? The taxpayers should get the information. Why can't we have it? SIG TARP do you know?
Sit down and i'll just spit it out for you. We wuz robbed. It is the biggest rip off in human history. The Trilateral Commission is a reality. Check it out. Sometime last summer, the Pirates realized their little pudding was about to collapse and they also saw Obama was a likely reality.
The only thing Bush's bailout did was make the world secure for rich folks.
"Why can't we have it?"
Because you are not a failing bank that would take billions in savings accounts down with it.
The cramdown amendment should have been defeated and it was. This is a victory for all Americans who intend to obtain a mortgage in the future. Permitting cramdown would only increase the cost for future borrowers.
You must be a banker.
Well said.
We cannot re-instate bubble prices. Those prices were not sustainable and still aren't.
Nothing Congress does, or doesn't do, will change that.
Wish you read as well as you type. No one of either party claims they can bring back inflated house prices.
and the massive default tht are sure to follow theses massive layoffs, hwo do you think that will affect the housignmarket and the banks holdignhtese assets, i mean really, bail out the banks with my tax dollars, they use that money to lobby against leveling the playing field in these negotiations for families to keep their homes, and you say yaa shoudl have been defeated, pls go away with your ignorance.)
we will have few future home buyers real soon, they are laid off, or in fear of it, they are over worked, and definitely under paid, i feel it everyday, makes one want to turn to crime cause all the dam crooks are getting over like fat rats, while hard working Americans are being put inthe streets with their whole family and banks are tearign down their houses.
THIS IS JUST NOT RIGHT AND NEEDS TO BE RECTIFIED IMMEDIATELY
ALL THESE SHORT SIGHTED PEOPLE, CANNOT SEE THE HORROR OF THE NEXT 20 YEARS if more is not done for the people instead of just for business.
I am so tired of business controling everything for the purpose of profit,
and of politicians turning a blind eye to the needs of the people who voted them into office.
Not surprised. The Republican attitude has been.."Whatever we can do to make this administration fail"...and their choices defy reason. The presence of loss of memory regarding the last EIGHT years and refusal to meet half-way in the spirit of bipartisanship is only part of their problem, but it becomes everyones.
What are you talking about. It's the Democrats who are shoveling taxpayer money as fast as they can to the banks.
The Democrats have a majority and can pass whatever they want. They didn't pass this 'cram down' bill
You are right. As Sen. Durbin who sponsered the so-called "cramdown bill" said, "The Bankers are still the biggest lobbying group in D.C. and they own the Senate".
The bill would have allowed judges who have foreclosures come in front of them to lower the mortgage to what the house is actually worth. They banks will end by having to foreclose, put the house on the market and still only get what the house is actually worth in today's market. The banks would have saved money by just charging the current owner what the house is worth. But no. That would have meant giving up power. No one ever gives up power. Power must always be asserted. Forgive people for thinking an election might matter. The struggle is not over.
i do believe that no republicans once again voted for this amendtment
There is more than one way to defeat a homeowner. One is to be a bank (well not all of them) and the other is to be a writer. I don't know about you but the things that have absolutely taken me down, made me feel worst and stolen any hope I had (at the time) were words.
There is a pretty simple answer to all this... elect progressives next time. Ben Nelson isn't even on the same planet as a Democrat. Obama does not have a magic wand. And all this negativity is getting a little gruesome. It really does hurt people you know. How you make them feel, whether they have hope is critical to them making it through this.
Americans still have a back door rebellion: if you have credit card debt, stop paying it! First stop outright, then if you feel really really bad, go to a credit counselor,and make one low payment. Worried you'll have bad credit when you want a future car/home loan? Guess what: the lenders are so desperate to sell anything, believe me, they'll finance you. There are already millions of people in your position. I've just watched several people do this. They had tens of thousands in debt, had it reduced via an agency, they then turned around and bought houses. Worst case scenario, you wait out the statute of limitations on your debt. Here it is 8 years. Disclaimer: I advise no law breaking.
BTW - I have no credit cards, nor do I plan to get one; debit and Amex only.
Hank, your advice is so bad that I bet a bunch of fools will follow it and get into trouble for the rest of their lives.
and can you believe this....A friend and his wife went to buy a new car in Iowa. They knew what they wanted and the dealer said, "no, we don't deal over prices anymore". They said fine, and went elsewhere and got their new car and everything on the list. Watch this same dealer start whining about failing business! I am keeping my Subaru til it dissolves!!
There is only one way to control bankers. Put the usury laws back in place. Banks are uncontrollable because they can make an unlimited amount of money for a low risk. As bankers have figured out there is no reason to make loans to business. Why take the risk when you can get 35% on credit cards - they can't make that on business loans. This is what is driving the demise of the U.S. economy, and it is not going to change until banks get back to the business of being banks, and stop being loan sharks. Without usury laws all of the other so called solutions are just putting band aides on a gushing wound. It is time to treat the problem, and that means usury laws.
Screen;
You're right! They are raping us! Everyone STOP using credit cards unless it's absolutely necessary. Don't just give them your money! Mortgages-, the banks don't have anything invested as they sold them in the securities ponzi scam. The end investor, some foreign entity, is left holding the bag of crap. They try to blame the brokers/ borrowers - the bankers knew EXACTLY what they were doing along with wall street. THEY created the programs and approved the loans! The Fed reserve ALSO was investing in derivitives. The banks get 6% dividends from their stock in the Fed Reserve. Our banking system is a scam, and the people are getting screwed! So what do we do? Use your local credit union, use seller financing, save up until you can afford to buy. DEMAND a new banking system run by the people and not corrupt corporate cronies that could care less if we lose our homes. They have nothing invested. They got reimbursed when they sold the loan to Fannie Mae.or Freddie Mac who in turn sold to the wall street spin machine. The banks DON'T own the majority of the mortgage notes! This mess was created by Wall Street in bed with the bankers helped by deregulation that allowed them to get away with it. We need NAMES of politicians that have their hands in the cookie jar and hold them accountable. Eliminate the "campaign" contributions scam that is just a way for them to "legally" get kickbacks. ENOUGH!
Ann's article points to a more general dynamic that will likely be coming to the foreground in the near future: the parasitic nature of the wealthy classes, corporations, and institutions as the suck the blood out of the middle class. When they become efficient and powerful enough, they'll kill their hosts, and then they'll starve themselves. It's the middle class that keeps the economy's engine running through all of that massive consumer spending. When there's no more middle class, there's no hope for another economic boom. We'll have no money to convert to corporate profits, which keeps those dividend recipients happy. Right now, the economy is shrinking from the product of this dynamic. And it will keep shrinking as the middle class shrinks. What the wealthy demonstrate is their abject stupidity. They become lazy with the thought that the Marketplace will self-correct. Well, sure it will. Without planning and wise intervention, the Marketplace will self-correct into third-world status. It will sell rice, soy products, and insect larvae for slave labor.
Right on!
I keep wondering who Wal-Mart plans on selling to once they have driven competitors out of business and suppliers offshore. I also wonder who the Repubs will rob from once the middle class is gone. The middle class started democracy and it's demise will bring about the demise of democracy. We can see it already in the partial dismantlement of both.
The Founding Fathers so carefully balanced the needs of the many against the destructive power of the wealthy. That's why we are a Republic instead a straight Democracy. The rights of an individual rich guy or poor anarchist are supposed to be equally protected against the will of the majority. This delicate system is supposed to protect us from class war.
But the rich have gone too far. They are the ones who started this round of class war. God, i hope we can keep the Republic intact while it rebalances itself. I wonder if it can re-balance in the light ot elections that cost millions and all those millions mostly go to mainstream media. The day we hear about Public financed elections from anyone on MSNBC, just for instance, will be a cold day in hell. It is completely against the interests of mainsteam media to tell us that the rest of the civilized world has public financed elections that only last a couple of weeks. No, in this country the same Supreme Court that brought us Gore v Bush says "Money is Speech".
Hey! This is America. If you pay for it, you own it. Until we pay for elections, Congress will remain owned by the people who do pay. We have Obama. We paid for him. Let's give him political cover in every way available.
The love of money is the root of ALL evil.
no, the love of "stuff" is the root of all evil... buying it is what gets us into trouble,
For the first thousand years of Christianity, Greed was the root sin.
The Christian church pronounced that charging more than 10 percent interest on a loan was a mortal sin. That meant the sinner went straight to hell. That's back in the day when mortal sins required remedies like walking to Rome on one's knees to beg forgiveness from the Pope himself.
I still think charging more than ten percent is a fatal flaw. It's enough of a sin to be shunned by men if not by God.
Capital's need for loans that risk that much, is the reason Islam and Capitalizm are at complete opposite ends. Like fire and ice. There's more than one reason things are as they are.
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