The Flooding Didn't Destroy Enough Houses

EN ROUTE TO NEW ORLEANS--Along with other New Orleanians, I've been amazed at the lack of alacrity with which both Republicans and Democrats have approached the problem of a federally caused flood that destroyed or damaged hundreds of thousands of homes, wrecking whole neighborhoods and communities, and spinning half a city's population into involuntary, semi-permanent exile. Now the answer becomes clear: the post-Katrina flooding just didn't destroy enough houses.

Latest estimate, in today's Times-Picayune, 105,000 residential buildings severely damaged in the City of New Orleans alone, a $14 billion loss. Apparently, judging by the turtle-like response, just not enough.

This becomes clear when you consider the heart-pounding race to come up with a plan to cushion the "legions of" subprime borrowers from the consequences of their gullibility, as their low "teaser " interest rates expire (note: they're called teaser rates for a reason).

"Legions," in NYT-speak, may mean millions, but, more importantly, these folks probably live in more than one state. So nationally prominent Democrats, like Hillary Clinton and Barney Frank (Congressman, have you yet been to post-K New Orleans ?) are falling all over themselves to "rescue" people who just couldn't bother to read fine print, who just chose to believe TV commercials about their incredible luck in qualifying for home loans, despite, in many cases, lack of income, jobs or assets (those loans even have an industry codeword--NINJA). For them, home loans became less a subject of sober and prudent financial judgment than an adjunct to Powerball.

According to today's NYT, the "big wave of defaults" "would be crashing during the primary and general election campaigns next year". So, New Orleans, if you want real help, please schedule your next failure of the federal levees during an even-numbered year.

Comments

[RobertPaul]

The millions of people that fell for the "something for nothing" loans blend into a medium white.
The people of NOLA blend into a dark brown.
any other questions?

[artsandminds]

actually from what I have read you are wrong, many of the folks who will be effected are Latinos. Lower middle class will be the hardest hit.

[katlade]

As usual. President Bush does not like the lower middle class.

[trailblazer]

I'm a California real estate broker. In the County Economic Profile I receive every month, one page lists the "top 10 surnames of home buyers." The top 9 are hispanic, the 10th is asian. However, no one is publishing a list of the Top 10 Foreclosure Surnames, at least not publicly. You can all tell me I'm a flaming bigot, but some of the biggest jerks in my industry are hispanics taking advantage of other hispanics. Many times, latino families use a latino agent/broker, believing they will watch out for them, and they are the first to screw them over. It's a disgrace.

[NoMoFearNoMoHate]

are you saying that these latinos wouldn't take advantage of white people or anyone else for that matter or are you just saying that they are behaving like white bigots?

to me it just seems that everyone is trying to take advantage of everyone else while trying to avoid being taken advantage of themselves - welcome to the United States of Capitalism!

those who took these loans should hang their heads in shame for their lack of fundamental analytical and mathematical skills. there is no compassion for someone who has disgraced themselves and ruined the housing market for people who would like to buy a home for a reasonable price which is impossible because of the over-priced homes they bought with their gimmick loans that even an idiot could have seen was a sham! The disgusting pukes who created these loans should be put in a public stockade and take what's coming to them!

[alkamm]

I did not realize that movement was afoot to bail out the naive bastards who signed on to these legal, but predatory loans. I though the government/central bank had focused mostly on rescuing the big mortgage companies.
I wouldn't worry too hard about Hillary working to help these small timers, no matter how much their combined debt threatens the economy. As she bitched when confronted by the fact that many small businesses wouldn't be able to afford her recommendations to change the health care system, she can't be concerned about every little underfunded business.
I think we can rely on the usual suspect impotent calls to action, and the major government rescues will focuson the corporations who sold the mortgages and are even now repossessing thousands of them.

[yellowdogSC]

Isn’t this essentially a “mea culpa” for screwing half of America with the credit card company bankruptcy law, designed to ruin that half of America one paycheck (or one doctor bill) away from the street?

[Enid]

The lending and borrowing in mortgages is only about

GREED

Borrowers taking mortgages with the idea the next guy will pay more
for the property and in so bailing then out of their dept or making a big
profit as many have and are encouraged to do.

Greed

Lender's go for the throat but noting new there. However when
your government is legislating to hurt you by allowing credit company's
to locate in states that have structured their laws to allow for usury
rates and penalties to borrowers that would make a loan shark blush.

Greed

Bankruptcy laws with thumb locks benefiting the lender. Often insulating
the lender allowing paper loses to turn into hard cash gains.

Greed

The American Dream?

Hope you get sick, or lose your job or some other calamity. That's how many
make THEIR living this day.

GREED, look it up in your Bible.

[NASCARLiberal]

John Edwards is the ONE candidate who has been talking about this at least since 2003, if not longer. He sees it as a big issue, as do I, and I'm not sure any other candidate gives a damn about it. We should keep that in mind when it comes time to vote ... not that most of us have any input into which candidate is selected.

[bjorne]

I want to tell YellowdogSC a little story. In Aug of 2006, I was sitting in a restaurant with my husband's cousin and her husband and my son. My son said that his grandfather on his mother's side (my Dad) was a Yellowdog Democrat. I had warned Nick not to talk about politics with his SC kin, because they would probably be Republicans and we would in a fight (we're DFlers from Minnesota). The cousin's husband said he was a Yellowdog too and that he hated Bush and the things that the GOP had done to our country. After that I didn't feel so bad about my "Had Enough" bumper sticker (although someone did fly me the bird at Myrtle Beach) and I knew there was hope for my late husband's state. Also, my kids want to go to Clemson where their Dad went. I know this is off topic, but I am facinated by the name yellowdog.

[lastams]

Once again no one seems to be asking the right questions.
The Fed could save both mortgager and mortgagee by simply lowering the interest rate.
The reason they won’t is because of massive foreign investment and the return that the Saudis, Chinese, and others are making on high interest rates.
The Fed has increasingly viewed the “economy” from the perspective of speculative profit instead of infrastructure investment and positions itself accordingly.
The profiteers don’t seem to realize that they cannot continue to get the cream by killing off the cow…. Or perhaps they're just to greedy to care.

[RSOlive]

So, since it cannot lower the rates and keep the Chinese & Saudi's etc. happy, it still has to hold up the hedge funds. You didn't see anyone scrambling to save the folks signing variable rate mortgages from going under until Time Magazine and others pointed out the fact that those mortgages are sold uphill and come to rest at the hedge funds that are hugely leveraged, with a probability that the whole structure will fail sending us into recession or worse. Of course with a couple of decades of deregulation going in the opposite direction of the controls put in place after the Great Depression, this was inevitable...both the danger to the economy and the politicians' reaction when the richest among us face failure.