I watched the countdown to the Bailout vote last Friday, as I stood in a pizza joint. When it became clear it would pass, I actually had tears in my eyes. While I saw our economic future fade into oblivion, no one in the pizza place seemed to notice what was happening.
I didn't want to be alone while this moment in history passed, so I dialed a friend's cell phone. "You will always remember where you were during this moment. It is like where you were on the morning of 9/11 or when John Kennedy was shot," I said. I meant it. I was stunned, paralyzed and frightened. Our desperate Congress didn't seem to get it.
I felt powerless and worried about the future. I recalled the Asian currency crisis and the implosion of Argentina. It made me feel sympathetic toward citizens of third world countries who sneak their cash out, under cover of darkness, because they are never quite sure when the next crisis will occur. Only now, no country is safe. This thing is spreading like Aids in Africa.
This morning, I saw a ray of hope in the most unlikely of places. Countrywide Financial, faced with a lawsuit over deceptive mortgage practices, has agreed to modify tens of thousands of loans to keep people in 11 states from losing their homes, according to Illinois Attorney General Lisa Madigan. This is the kind of step that should have been mandated at the federal level before we agreed to provide $7 billion dollars plus pork fat to buy the loans off the books of credit strapped banks.
Finally, someone is taking a practical approach to the problem! This action is a demonstration of how taking one small step can get mortgages performing again. Attorney General Madigan has demonstrated leadership while everyone else is waiting for the Government to tell us what to do. Attorney General Madigan, I don't know you, but I would like to shake your hand.
It has become painfully clear that the Bailout has not created a stunning or even modest turnaround in the markets of the United States or abroad. It will take months before the programs created by the Bailout are up and running. The Street is telling us they realize the emergency is really a "hurry up and wait" scenario. Wall Street knows just how we got into this mess and, though you may not want to believe it, also knows better than anyone about how to get out of it. There are steps that can be taken to get these loans moving again -- if Wall Street could just put its fears aside and act like the players they claim to be.
For weeks, I've been bellowing that the best way to get the economy moving again is to get these loans performing. The best way to get these loans performing is to engage in a large scale restructuring of their terms. I challenge every bank, every state attorney general, every regulator, and everyone in law enforcement to push for immediate restructuring of the loan portfolios. It can and must be done. There are no do-overs here. It is game time!