We need more like this from Clinton

[Buzz cook]

I'm posting this in its entirety because Clinton also gave this as a speech on the floor of the senate.


http://www.wsj.com/articles/SB122230767702474045

Let's Keep People In Their Homes
By Hillary Rodham Clinton
Updated Sept. 25, 2008 12:01 a.m. ET

There is a broad consensus that Congress must act to stave off deeper turmoil on Wall Street. Irrespective of the final agreement yet to be reached, there are several principles that must be part of a broader reform effort that begins this week and continues in the coming months.

This is not just a financial crisis; it's an economic crisis. Therefore, the solutions we pursue cannot simply stabilize the markets. We must also deal with the interconnected economic challenges that set the stage for this crisis -- and reverse the failed policies that allowed a potential crisis to become a real one.

First, we must address the skyrocketing rates of mortgage defaults and foreclosures that have buffeted the economy and ignited the credit crisis. Two million homeowners carry mortgages worth more than their homes. They hold $3 trillion in mortgage debt. Nearly three million adjustable-rate mortgages are scheduled for a rate increase in the next two years. Another wave of foreclosures looms.

I've proposed a new Home Owners' Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We've got to stem the tide of failing mortgages and give the markets time to recover.

The time for ideological, partisan arguments against these actions is over. For years, the calls to provide borrowers an affordable opportunity to avoid foreclosure as a means of preventing wider turmoil were dismissed as government intrusion into the private marketplace. My proposals over the past two years were derided as too much, too soon. Now we are forced to reckon with too little, too late.

As a result, the home-mortgage crisis slowly eroded the value of debt instruments upon which Wall Street firms were depending. That is how this house of borrowed cards began to fall. If we do not take action to address the crisis facing borrowers, we'll never solve the crisis facing lenders. These problems go hand in hand. And if we are going to take on the mortgage debt of storied Wall Street giants, we ought to extend the same help to struggling, middle-class families.

Second, American taxpayers should have a voice and a stake in the resolution of this market crisis. If the Treasury proposal is enacted in its current form, the American government would assume enough financial risk to become the majority shareholder in the companies rescued by taxpayer dollars.

The American people are bearing the risk and therefore deserve to reap the rewards of a shared equity model. And mortgage securities bought by taxpayers must be valued accurately at prices disclosed in real time, with checks and reporting requirements to prevent abuse.

Third, taxpayers are being asked to bear an unparalleled degree of financial risk. We cannot allow taxpayers to take on this burden so that Wall Street and the Bush administration can hit the "reset button." This historic intervention demands a historic shift in priorities: an end to the broken culture on Wall Street, and the broken economic policies in Washington.

Corporations that will benefit must be held accountable, not only to large shareholders but also to the American people, who are rightly tired of business as usual: short-term profit at the expense of long-term viability; lax oversight and regulation; obscene bonuses and golden parachutes regardless of performance; reckless risk-taking that has placed the markets in jeopardy; rewards for foreclosing on middle-class families and selling mortgages designed to fail; and outsourcing good jobs to serve short-term stock prices instead of America's long-term economic health.

This is a sink-or-swim moment for America. We cannot simply catch our breath. We've got to swim for the shores. We must address the conditions that set the stage for the turmoil unfolding on Wall Street, or we will find ourselves lurching from crisis to crisis. Just as Wall Street must once again look further than the quarterly report, our nation must as well.

Hillary is a technocrat. By that I mean she sees problems as soluble. In the case above she offered a time tested solution to the housing/mortgage problem that still exists to this day.

The thing most people will notice is that it is a "New Deal" solution. What most will miss is that it is just a boring bit of banking and accounting. All it requires is a bit of bureaucracy and money. There's no magic, no social experimentation, ad no grand scheme. It's just something that has worked in the past and would work now.

Many of the solutions to our nations problems are just like that, simple and straight forward. Roads and other infrastructure that dates as for back as the turn of the century are falling apart. The solution is to fix them.Of course there are details like who will pick the persons to tell the person with the shovel where to dig.

That is where Clinton comes in. I don't think we've had a candidate that is better able to work through those details and to present her proposals than Hillary Clinton.

If Clinton makes a series of speeches on this type of subject I think she will go a long way toward persuading people to vote for her.

Of course the biggest problem is getting the media to cover something that isn't orange.

PS if anyone can find the video I'd appreciate it. My google foo isn't working.

[k8conant]

1. 8 years ago

so maybe we need HRC from 8 years ago. She's changed, however.

[Buzz cook]

4. I disagree

She wasn't coerced into making that speech or writing the op ed. If a person puts forth a plan on their own initiative they tend to stick with it.

If you will, that puts Bernie supporters in a strong position to influence Clinton. Bringing up something that both you and her believe to be a positive is something that she's more likely to implement.

I might add that this is something down ticket democrats can also use. If Clinton does so first they are more likely to follow suit.

[Buzz cook]

3. Yes it's too bad the Obama administration went with HAMP

I don't blame that on Clinton.

[Buzz cook]

6. By the time it would have come to a vote

She was already Secretary of State.

I just think you miss the entire point though. But maybe you'll come around in the fall.

[jillan]

7. Yet it was the Clinton administration that played a big part in the housing crisis.

http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html

In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. It is the subject of heated political and scholarly debate whether any of these moves are to blame for our troubles, but they certainly played a role in creating a permissive lending environment.

He repealed Glass-Steagall
Got rid of regulations on banksters which exempted credit-default swaps from regulation
Pressured banks into lending money to people that could not afford to pay their loans back.
Got rid of the Fairness Doctrine.
Nafta


Oh goody, I cannot wait for the Clintons Part Deux.

[Buzz cook]

9. With all due respect

It wasn't loans to poor people that caused the housing crisis. FannieMae and FreddyMac had far fewer failed loans than the industry as a whole.

It was the deliberate policy of selling bad policies by banks, which then repackaged them as dept instruments and investments which caused the crash.
http://thenewpress.com/books/chain-of-title

I'm afraid you fell for a right wing talking point, "blame it on the poor".

btw the fairness doctrine was kill by Reagan.

[jillan]

12. I am NOT blaming it on the poor. The banks changed their requirements to get loans by raising

the debt to income ratios that were acceptable.

[Buzz cook]

19. Yes, the banks did it nt

nt

[progree]

13. It was both. Plenty of people who couldn't afford their mortgages beyond an initial teaser rate

period got them.

I know someone that got a mortgage in 2006 that she was unable to pay full principal and interest on. No problem, the mortgage company just jacked up her income so she could qualify. And lied to her. Meanwhile, for a short period of time, she could pay less than even the interest cost of the loan (negative amortization -- that was allowed until her balance reached 115% of the original mortgage amount). The mortgage company lied to her about that too -- saying that only an extra payment a year -- 13 payments instead of 12 -- would be sufficient to not go into negative amortization. That was bullshit. Nowhere near close.

The mortgage company then just sells the mortgage as fast as they can to a company that bundles the mortgages into securities that are then sold to mutual fund companies that are then bought by regular goobers like me.

Back to her situation -- fortunately her interest rate -- based on the 6 month LIBOR plus 2.25% -- fell from the original 6% to about 2.8% currently (it is an ARM that resets every 6 months). So she's been able to handle that, just barely. No payment of principal yet, but at least she's paying fully on interest, so her mortgage balance isn't going up.

But on the 10 year anniversary (actually on Feb 1, 2017) she will have to start paying principal -- an additional $600/month. Plus any interest rate increases (there already has been a small one). There's no way she can afford to pay the extra $600/month.

I'm guessing there are a lot of people who got mortgages or refinanced them at about this time -- the height of the housing boom, and also when lending standards had gotten ridiculously slack (remember G.W. Bush's Ownership Society?) -- are reaching 10 year anniversaries when interest-only periods end. And any future significant interest rate increases -- and someday they will come -- will put the kabosh on many with ARMs. Who have been doing fine at 2 or 3% interest rates of the last few years, but can't handle 5 or 6% or more. Not on top of having to make principal payments.

[Lord Magus]

11. Get that Republican garbage about the Community Reinvestment Act out of here.

It's sick that a progressive would buy into that just to attack Clinton.

[jillan]

14. What's sick is that a progressive would live in denial. Were you not paying attention?

Because I remember this like it was yesterday.

[Lord Magus]

15. The Community Reinvestment Act played NO role in the housing crisis.

To claim it did is Republican nonsense.

[Live and Learn]

21. +10,000 nt

[progree]

10. "Nearly three million adjustable-rate mortgages are scheduled for a rate increase"

Sounds like today.

I have a friend who refinanced in late 2006. It was interest-only for 10 years, then after that, principal and interest must be paid on a 20-year amoritization schedule. That alone will raise her monthly payment by $600/month. On top of that, interest rates have already risen a little bit from their lows last year, and most likely will be somewhat higher in two years if not one year. Each percentage point interest rate increase is about an additional $100/month.

I know this is kind of off the subject of HRC's speech, but I keep wondering if a lot of other people are in the same boat now, and I keep wondering why I'm not hearing about it.

[Buzz cook]

17. No that's on subject enough

If the government were to take over your friends loan and right size it in a way that she could afford, that would solve her problem.

It is also a solution that other people looking on could understand and support.

[progree]

24. Maybe her credit score is too low. Its 811 -- 7 BIG HUGE POINTS BELOW THE MAX 818

It says "credit scores range from a low of 334 to a high of 818".

Just got it in the mail today - she was turned down by Chase (the mortgage servicer) for a HAMP mortgage modification. They evaluated it about 7 different ways.... anyway the only "help" she is eligible for is assistance in doing a short sale (sell it for less than the mortgage balance).

As a side note, my understanding is that Wells Fargo actually owns the mortgage. (So it wasn't one of the many mortgages of that era that was chopped into pieces and put into a bunch of different securities and sold off to whoever was dumb enough to buy them (or clever enough if they knew what they were doing and could resell them quickly to someone who was dumb enough...)

[font color = blue]>>If the government were to take over your friends loan and right size it in a way that she could afford, that would solve her problem.<<[/font]

Yup, all's they would have to do is keep the payment the same as she's been paying for the last 10 years, for just maybe 2 or 3 or 4 years -- until the home could be sold for more than the mortgage balance (even after paying selling costs). The house value is pretty close right now to being at the level of the remaining mortgage balance. That way they could have the mortgage balance paid off in full. (Barring another recession in the meantime).

The f****ers didn't count the rent her roommates pay, which almost doubles her income. She is self-employed, and the rental income is actually more steady and reliable than her "regular" income.

[Jitter65]

16. Yep, needs to be her next stump speech before Tuesday. "in 2008 I laid out a plan to.....

[Buzz cook]

18. Interesting take on

a New Deal program that dates back to the 1930s. Because it was mentioned 8 years ago when it was an effective solution to a problem that still exists today, it is too old?

Or are you confusing the word "like" which means similar to but not including. I think Clinton and her team will be able to up date the speech. Don't worry about that.

[Henhouse]

20. HRC has "New Deal" solutions...Thanks for this post...

Hillary is a technocrat. By that I mean she sees problems as soluble. In the case above she offered a time tested solution to the housing/mortgage problem that still exists to this day.

The thing most people will notice is that it is a "New Deal" solution. What most will miss is that it is just a boring bit of banking and accounting. All it requires is a bit of bureaucracy and money. There's no magic, no social experimentation, ad no grand scheme. It's just something that has worked in the past and would work now.

[Octafish]

22. Great speech. What followed was something else.

"It’s complicated, and we’re going to make sure whatever we do is done in a deliberative fashion."



Pretzeldent Smirky McCokespoon, Oct. 3, 2008. Washington's Blog provides details n links:

The Government Lied When It Said It Only Bailed Out Healthy Banks … 12 of the 13 Big Banks Were Going Bust

Posted on January 11, 2013 by WashingtonsBlog

The Government’s Entire Strategy Was to Cover Up the Truth

We noted in 2011 that the Geithner, Bernanke and Paulson lied about the health of the big banks in pitching bailouts to Congress and the American people:

The big banks were all insolvent during the 1980s.

And they all became insolvent again in 2008. See this and this (busted link at WB).

The bailouts were certainly rammed down our throats under false pretenses.

But here’s the more important point. Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not. They were insolvent.

Tim Geithner falsely stated that the banks passed some time of an objective stress test but they did not. They were insolvent.

CONTINUED...

Who knows? Perhaps some of this information will finally make it into my local noosepaper. For some reason, it hasn't been on the television screen.

[Buzz cook]

23. Yup wat followed was different.

We can blame Obama personally for a lot of that, for all the failures after January 2009.

Most of it was done outside of public awareness and certainly the media was and is no help. That's why I added the proviso that the media might not allow this type of conversation to go public. It certainly didn't in 2008.

Still I think this approach would be attractive to a majority of voters.