The Society of the Owned, Pt. 6: Just Drop Off the Key

[marmar]

from OurFuture.org:



The Society of the Owned, Pt. 6: Just Drop Off the Key
By Terrance Heath

March 14th, 2008 - 10:36am ET


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When free market fundamentalists like those in the Bush administration start at federal government action, after two interest rate cuts didn't do much to stall stop the economy sliding into recession, you know things have reached a crisis point. By the time they start taking baby steps towards a bailout, you can bet that — as with another disaster — many people are well underwater, some have drowned, and some aren't so much saving themselves as letting the tide carry them.

In the past week, the Bush administration and Federal Reserve chair Ben Bernanke have been making vague gestures that open the possibility an increased government intervention in the aftermath of the subprime debacle. That may be due to a trend which suggests some people caught in the crises spawned by the subprime disaster have found a outlet for their anger that, if number of those who chose that option reaches critical mass, could have consequences beyond what most of us could ever imagine.

It was when Fed Chairman Ben Bernanke mentioned the other "f-word" — after twice tinkering with interest rate reductions, and a handful of additional interventions met with roadblocks in Congress — that I began to think that maybe the full implications of the crises had dawned on the administration, as well as the potential consequences.

However much they might oppose it on ideological grounds, the Bush administration and the U.S. Federal Reserve are inching closer toward a government rescue of distressed homeowners and mortgage lenders.

Ben Bernanke, the Fed chairman, told a group of bankers in Florida on Tuesday that "more can and should be done" to help millions of people with mortgages that are often bigger than the value of their homes.

Though Bernanke stopped well short of calling for a government bailout, he used his bully pulpit to try to push the banking industry into forgiving portions of many mortgages and signaled his concern that market forces would not be enough to prevent a broader economic calamity.

And the news that the Bush administration — packed with deregulation devotees as it is — has started taking baby steps toward tighter regulations (accompanied by headlines that the the subprime mortgage crisis has touched the Carlyle Group) merely confirms it.

A presidential working group issued a broad set of proposals Thursday to correct weaknesses in the way homes are financed so that the sort of problems now crippling the nation's housing sector won't recur.

The President's Working Group on Financial Markets recommended changes in virtually every area of mortgage finance. It called for tougher state and federal regulation of mortgage lending and mortgage brokers. It also supported creating a national licensing standard for anyone who originates mortgages.

Its report is notable, however, for its restraint in expanding federal regulation: the national licensing scheme, for example, still would depend on enforcement by states. Weak local enforcement is one major reason that the housing market grew into a bubble and then burst.

The report also didn't propose putting the non-bank lenders, who underwrote about three-fourths of the now-toxic sub-prime mortgages, under federal regulation. Non-bank lenders, the largest of which are now in bankruptcy, must follow federal principles that are enforced by states, which often lack the capacity to do so.

You may judge for yourself, based on the above, how serious the administration is or is not. The point is now that some really important people — the actual ownership society — are in trouble, it's finally time for action. .......(more)

The complete piece is at: http://www.ourfuture.org/blog-entry/society-owned-pt-6-just-drop-key

[ananda]

1. Oh, well, if it's affecting the owners..

.. then something serious must be done.

Forget about the peons and havelesses.

But you know what? I don't think the
owners really have a clue as to the extent
and the type of damage they've actually done..
and definitely no clue about the ultimate
solution.

Because.. any solution predicated on the
selfish, greedy interests of the few.. as
opposed to those of the many.. cannot
achieve a balanced, longterm outcome that
would prove favorable enough to make a real
difference.