Bailout Won't Stop Foreclosures

[garybeck]

Bailout Won’t Stop Foreclosures

Bailout Won’t Stop Foreclosures that Push Prices Down
Center for Responsible Lending
September 20, 2008

The government plan announced by Treasury Secretary Paulson and Fed Chairman Bernanke fails to deal with the root cause of the crisis---families in foreclosure----and instead is purely and simply a bailout of the lenders who created this disaster. The bailout will not solve our economic problems because it will do virtually nothing to stop the foreclosure epidemic. Continuing foreclosures will drag down the economy even further.

A truly comprehensive plan must also benefit ordinary, hard-working Americans, the ones who already are bearing the brunt of Wall Street’s excesses. If it doesn't, then any new plan is more of the same----only with more taxpayer money at stake.

By forcing taxpayers to buy abusive and reckless loans from irresponsible lenders,taxpayers are funding a multi-billion dollar subsidy to private corporations. Yet the millions of families who have been unfairly pushed to the financial brink by these mortgages get nothing. Only by preventing the 6.5 million foreclosures expected in the next few years---and the $356 billion drop in surrounding property values that will result for an additional 46 million families----will the economy begin to recover.

Don't let anyone tell you the government will be able to prevent foreclosures by buying this troubled debt. Wrong. Mortgages of questionable value have been sold into highly complex securities, which have been carved up and sold to thousands of investors around the world. The government can't put these Humpty Dumpty slices back together again because it won't own or even control them all. Bailing out financial institutions is NOT the same thing as providing relief to foreclosure-plagued American families.

http://www.responsiblelending.org/press/releases/bailout-won-t-stop-foreclosures.html

[DJ13]

1. Of course not

That can only be fixed by a reevaluation of the low wage policies US corporations have been using to depress wages.

Without a fundamental change in wages, so people can AFFORD to pay a mortgage, house prices will have to fall alot further to meet the ability of the average american to afford it.