It's the Foreclosures, Stupid (NACA)

by Dollars and Sense

This is an "action alert" from the Neighborhood Assistance Corporation of America. The CEO of NACA, Bruce Marks, was on the radio program Here and Now this morning explaining why he opposes a bailout; there appears to be no way to listen to the segment, but they may put up a link to it sometime at the show's site. Hat-tip to John Miller.

There is one reason for the financial crisis – Foreclosures.
There is only one solution – Restructure mortgages to make them affordable.
Who would benefit – Everyone

The above sounds very basic but we are providing One Trillion dollars to bailout major financial institutions and insurers without addressing the underlying cause of the crisis which are the millions of homeowners at-risk of foreclosure. They want to say it is too complicated and throw out terms like CDO, Leverage swaps, and others to justify giving President Bush a blank check. While we have been there, the Congress is getting ready to repeat the disastrous past.

We are now committing hundreds of billions of tax payer dollars to bailout the very institutions who created the crisis. At a minimum lets use some of these funds to get the investors to do what is necessary in making these mortgages affordable. The previous bailouts of Bear Stearns, Fannie Mae, Freddie Mac and AIG have not opened up the credit markets. Despite the huge commitments of taxpayer funds they have accomplished little. In fact, Fannie and Freddie continue to refuse restructuring on affordable terms – having their owners the American people foreclosing on themselves.

It is about time that we stop rewarding the companies, their management and investors who use the Idiot excuse. They continue to say that despite making millions of dollars a year, they could not have predicted the current circumstances and could not have thought of more effective mortgage lending. NACA knew eight years ago and did it the right way. Either their actions were a resulting of unbridled greed or tremendous stupidity. Either way, they should not be bailed out.

Congress must not be allowed to commit the largest amount to taxpayer funds in rewarding these scoundrels or idiots – choose your description. A trillion dollar bailout is unconscionable. We are rewarding the companies whose only motivation was greed. For our tax dollars to meet the intended purposes we will purchase the most problematic loan portfolios from the most irresponsible lenders. We will also pay the highest price since that is required to provide them with the capital needed to survive. This is truly the moral hazard bearing its ugly head.

The solution is right in front of us. Congress and the administration must immediately put a moratorium on foreclosures for homeowners who are owner occupants. Then through regulation, legislation and/or economic incentives have homeowner’s mortgages restructured to make them affordable for the remaining term of the loan. If NACA as a non-profit can do this, so can these servicers and investors given the appropriate legislative and regulatory requirements and incentives.

Contact your politician and make your views known. TELL THEM IT’S THE FORECLOSURES STUPID. NO BAILOUT OF THE PREDATORS. MAKE THE MORTGAGES AFFORDABLE

Labels: bailout, Bruce Marks, financial crisis, foreclosures, Neighborhood Assistance Corporation of America

 

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9/29/2008 01:54:00 PM