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TechnoratiCongress Blames Treasury as Foreclosures Mount
BOSTON - A congressional banking leader Tuesday blew hot air and blame at the U.S. treasury secretary about the ongoing home foreclosure crisis, but neither made a commitment to help stressed homeowners.
![[Their plan to help those facing foreclosure: not one thing. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke testify at the House Financial Services Committee hearing on 'Oversight of Implementation of the Emergency Economic Stabilization Act of 2008 and of Government Lending and Insurance Facilities; Impact on Economy and Credit Availability' on Capitol Hill, November 18, 2008. (Kevin Lamarque/Reuters)]](http://www.commondreams.org/files/article_images/paulsonbernanke1119.jpg "paulsonbernanke1119.jpg")
Congress is officially
out of session, except for this week, and has no plan to address the
looming problem of foreclosures until it returns in January, when
Pres.-elect Barack Obama takes office.
Congress would have full authority to do so.
Instead, Rep. Barney Frank, chair of the House Financial Services Committee, told Treasury Secretary Henry Paulson that he should address the foreclosure problem and direct money from a special 700-billion-dollar fund to homeowners in trouble.
'It is essential that we do something, that we use some of the [funds] toward foreclosure reduction,' Frank said.
Paulson, a lame-duck secretary who will leave in January when Pres.-elect Obama appoints a new secretary, said he knows how he is going to spend the remaining funds, and foreclosure assistance and an auto industry bailout is not part of his plan.
Congress has been apprised of Paulson's spending, has vast authority over it, and could have directed him to intervene on behalf of homeowners.
Congress handed the 700 billion dollars to Paulson on Oct. 3, after Paulson said the emergency money was urgently needed to prevent a wholesale collapse of the U.S. banking system and economy. The U.S. public was highly critical of the plan, and called Congress by the thousands, but legislators, led by Frank and other Democrat leaders, authorised the money.
Without help, five million U.S. homes will be lost to foreclosure in the next two years, according to the Federal Deposit Insurance Corporation. Two million have already been foreclosed on.
Committee member Maxine Waters expressed anger that she helped win votes for the 700 billion dollars, which she said she thought would be spent on foreclosure assistance.
'I worked very hard to pass this [bailout] legislation. I was looked at with suspicion when I sold this to the Congressional Black Caucus. I am disappointed you have just divorced yourself from dealing with foreclosures,' Waters told Paulson.
Paulson, formerly of Goldman Sachs, has spent the funds directly on financial firms, and spent hundreds of millions to hire financial firms to disperse the money, and track it.
'We are turning the corner. We have stabilised the system and prevented a collapse. We have a lot of work ahead. It's a lot of work to get the markets going again,' Paulson said.
Paulson has given 125 billion dollars in cash to nine of Wall Street's largest firms, in exchange for limited stock, and 148 billion dollars so far to other smaller banks.
'You, Secretary Paulson, took it upon yourself to ignore the authority and direction that Congress gave you. I couldn't believe it when I heard that you abandoned the foreclosure effort,' Waters said.
Paulson expects to spend up to 350 billion dollars before he leaves office, and said the remainder will be directed to credit card companies, and businesses that make auto and education loans.
None will go toward foreclosure assistance or the auto industry, he said.
'I feel a great responsibility to stick with the purpose of the [fund], to stabilise and strengthen the financial system. Auto companies fall outside that purpose,' Paulson said.
'Why are foreclosures still increasing, in light of the 700 billion dollars spent at taxpayers' expense?' Rep. Nydia Velazquez asked Paulson.
'It's hard to imagine we're not going to have a large number of foreclosures when you look at what we've gone through, and the shoddy lending practices,' Paulson said.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, has a plan in hand to help homeowners, and told Frank and Paulson she needs 24 billion dollars to get it started. It appears homeowners may have to wait until January for Congress or the Treasury to consider funding it.
None of the powerful congressional leaders nor Paulson has stepped forward to propose funding for it.
Frank told Paulson that he should address the foreclosure problem.
'The fundamental policy issue is our disappointment that funds are not being used out of the 700 billion dollars to supplement mortgage foreclosure reduction,' Frank said.
Waters expressed frustration that Paulson has refused so far to fund Bair's plan, and said it is badly needed. Mortgage holders are not voluntarily trying to re-negotiate their unfair loans, she said.
Waters' office is trying to help 26 homeowners to re-negotiate lower interest rates on unfair loans.
'It is absolutely ridiculous. One of the banks is Wells Fargo. I've had to go all the way to the chairman. I stay on the line for one hour just trying to get to a servicer. Then when you talk to the servicer, they don't even know enough to evaluate the incomes of the owners,' she said.
The foreclosures are at the centre of the financial meltdown, and unless stemmed, will continue to drag down the U.S. and global economy, economists told the panel.
'Stopping the financial crisis and getting credit flowing again requires ending the spiral of mortgage foreclosures and the expectation of very deep further house price declines,' said Martin Feldstein, of Harvard University.
Alan Blinder, an economist at Princeton University, painted a bleak picture of the next year.
'The hope that we might avoid a serious recession is now gone,' he said.
Blinder said that if the U.S. takes aggressive action by spending billions on infrastructure and other projects, the country may be able to hold unemployment at 8 percent. It currently stands at 6.5 percent.
22 Comments so far
Show Allone bank to rule them all
one bank to blind them
one bank to fool them all
and in the darkness bind them
"Blinder said that if the U.S. takes aggressive action by spending billions on infrastructure and other projects, the country may be able to hold unemployment at 8 percent. It currently stands at 6.5 percent."
According to John Williams from Shadowstatistics.com, the unemployment rate in this country is more like 14 percent and climbing. He uses statistical measurements that were on the books back in 1980 - before our government altered these methods of calcuation while they outsourced our companies and jobs by the millions and imported lower-wage workers through the HB-1 visa programs.
And we're not even close to hitting "bottom" yet with tens of $$TRILLIONS due to hit us like a finacial Atom bomb from the Credit Default Swaps market.
The sell-out of our industrial base to China, a move designed to reduce our standard of living and a move to break Unions, is backfiring on the BushCo..
The Republican Party might just as well remove itself from being.
They don't have enough bankers to support this right wing catastrophy.
It has become the Bankers against the working classes.
We shall overcome. Maybe the Banks can borrow money from Bill Clinton.
Have you ever noticed the department heads and many other senior personnel choices Bush has made tend to look like what Central Casting would send when a movie producer calls for actors to play henchmen roles? Take a gander for instance at those running Homeland Security and Treasury. And how could we fail to mention the VP? Granted those three share baldness and menacing demeanors, but even among Bush's more hirsute and quasi-handsome choices like Rumsfeld or Gonzales, they’d more likely be cast in a Bond film as a villain than a romantic lead. Should we mention Palin? No, let’s not.
Is it that people with a face like a film noir "heavy" naturally gravitate toward the Republican Party or merely what Bush feels more comfortable having around him?
It’s dangerous and silly of course to stereotype, especially based on looks alone. Nevertheless, it’s also interesting how many Congressional Democrats kinda look like characters in Keystone Kop comedies. Take Barney Franks and quasi-Democrat Lieberman for example. While those two appear almost more like Warner Brothers cartoon characters, wouldn't it be amusing if the principle behind this “casting” concept had some statistical correlation.
Just wondering.
Signed: Lawlessone [for more irreverence, see resistence-is-possible.blogspot.com]
Now there's the making of a research study and dissertation.
The menacing-looking Bush appointees and pals probably look the way they do because they are, and could we call them happy people? That whispery, controlled speaking voice of Cheney's ... I understand why his heart is made of all those mechanical valves. He's always cookin' inside about something, mostly, it seems, sneaky and to put something over on EVERYBODY and get MORE, MORE, MORE for himself.
Well, I'm going to try now to forget them ASAP. And probably that will be easy after they leave office and get all the profits they've made during this Administration from their Swiss Bank Accounts where they sent Phil and Wendy Gramm of Enron fame to guard them or set up accounts for money laundering. I believe that, based on my ferreting out various things. Otherwise I wouldn't say it.
Well, Bush et al. will head for that great chunk of Paraquayan land smack over the largest acquifer in that nation. WATER WARS! ... privatization and all that.
And Cheney is heading for Dubai to that new grand house in the sand.
Since your name is Lawlessone, I would have to say these fellas beat you in spades. Your name I assume, however, is based on resistance for good change, not socking away money in Swiss bank accounts.
cheers ... /cm
... and the Congress is now on recess until January 20, 2009.
Would they have been as alarmed about what is now happening to the taxpayer as they were when they encouraged the looting of the Treasury as the necessary step to help taxpayers, ... and such a short time ago, ... so alarmed and so concerned about their own various constituencies that they would have just the common decency to hold special sessions to lay down the law to the incompetent-for-the-people, but avaricious-for-self-and-banker/CEO-friends HANK PAULSON.
A DAYLIGHT ROBBERY has been perpetrated. Just more of What?-Me-Care? politicians whose service ends when it's vacation-break time until the Inaugural Gala. And I'm sure their lucrative salary checks will just keep coming, as usual.
In the next sixty or so days, how many of the taxpayers will be tearfully packing up the van, if they are lucky to have something that big, and taking up temporary residence in the Walmart parking lots or park areas along the highway or everybody moving in with somebody's kind cousin.
When a crime is being committed or has been committed, I hope that after the inauguration and the Obama administration is in place, that such obvious malfeasance will be dealt with swiftly, strongly and sternly.
If not, then I hope all those in prison or in jail for being caught with a nickel-bag of marijuana or those three-whatever-strikes-and-you-get-life inmates in California ... remember the guy who stole a video cassette, sneakers for his kid, and I don't remember, let's call it shaving cream, and was arrested and convicted for each separate offense? ... he's doing life.
But chances are Hank Paulson and his rich buddies will continue to drink Grand Marnier in the Club Room somewhere without a qualm.
And Congressional members on vacation will indulge in whatever are their pleasures as the nation's fore-closed-on folks, the newly jobless, the recent homeless at the shelter or in-the-streets people are waved away with an unspoken, "Let them eat cake."
A very vocal revolution is in order to demand that every regulation on Corporations and the Financial World be restored and new ones instituted also.
And that The Federal Reserve created and signed into law in 1913, with President Woodrow Wilson shortly thereafter decrying what he had done to bring about the ruination of his country, be dissolved. The old way was good enough, except all those Robber Baron types back then couldn't turn the kind of profit they felt they deserved unless one had a friendly, private agency of banks and bankers with a government-affiliated sounding name, like THE FEDERAL RESERVE. running things.
Well, here we are again, Mr. Wilson.
========================================
The Federal Reserve - Its Origins, History & Current Strategy
By: Wayne N. Krautkramer
Few perceive the truth about the Federal Reserve. Rare are those who know its origins. It is right in front of us, but our relative ignorance of economics and history is their protection. A quick history lesson is in order.
[CUT from October 14, 1066, A.D., to December 23, 1913.]
On December 23, 1913, the Federal Reserve Act, also known as the Glass-Owen Bill, was passed. The Republican controlled Senate rammed the bill through when many members of the US Congress were home for the holiday. [Sounds familiar./cm] The President, Dr. Thomas Woodrow Wilson, signed it into law one hour after being passed by the Congress! Somebody very powerful really wanted this law passed. The Federal Reserve System is an independent central bank. Although the President of the United States appoints the chairman of the Fed, and this appointment is approved by the United States Senate, the decisions of the Fed do not have to be ratified by the President, or anyone else in the executive branch of the United States government. Buried in the legislation was the granting of total power over the monetary policies of all US banks. A very curious statement is found in the original 1913 law. SEC. 30. The right to amend, alter, or repeal this Act is hereby expressly reserved. Reserved expressly to whom, or what? No definition is provided. This is the entire Section 30 statement! "Curiouser and curiouser, cried Alice". [Ah, but the opening for the Federal government to get rid of the private FED before it uses that clause again to do more damage.]
www.news.goldseek.com/GoldSeek/1095269452.php
==================================================
nuf said. - /cm
federal: a form of government in which power is divided between one central and several regional authorities;
"the federal reserve is about as federal as federal express" -the zeitgeist
Sioux Rose
CEE MIRACLES: I just gave some thought to the date of the Federal Reserve Act Bill's inception, it symbolizes the beginning of the sign of Capricorn. Pagans of ancient times celebrated December 21-22 as the winter solstice, and it is the DARKEST day of the year. Capricorn, ruled by Saturn, is also symbolized by the DEVIL card of the tarot, for it most exemplifies the lesson: "What profiteth a man to gain the world and lose his soul."
In addition, the planet Pluto which astrologers recognize as a force that symbolizes the destructiive and rebuilding complementary forces of nature, enters in to Capricorn at the end of this month to stay for about 17 years. Capricorn IS the sign of established bastions of power, and generally relates to conservatives and strict father-figure/top-down hierarchical institutions. Pluto means power, and often dark power (he's known as Hades, the god of the underworld, to the Ancients). The dark side of power, the eventual tearing down of present day governments due to their seizure of too many assets intended for the many correspond with Wall St already rocking and rolling as possibly never before.
Greed kills. It's stunning to me as an astrologer the degree to which the FED manipulates the money supply, and has its hands dirty with the current financial meltdown and PLUTO passing over the degree of the inception of this covert organization.
I should add that the real cosmic jazz heats up on this Zodiac point in late autumn 2009 and into spring 2010. Perhaps we'll see a true end to it? Pluto often involves death to clear the way for rebirth.
In Jean Houston's teachings, we are indeed in Jump Time, whole-systems transition.
A dark period for quite some time, and let us hope that we do make it into the light.
Incredibly powerful forces who do not give a fig for anything but their acquisition of more money, power and control.
It's so apparent.
We will see. That's all we can do except do what we can when we can as intensely as we can ... and hope now that this is truly a good man who has been elected who is spirtually sophisticated enough to move a few mountains without anything happening to him.
... and every single one of us is here now on this earth for a reason. To build, to oppose ... to create the juice.
c/m
Sioux Rose
CEE MIRACLES: Powerful post. I was thinking the same thing, about how dare they go home for 6 weeks when families will be starving over the holidays, why it's a virtual banquet of Ebineezer Scrooges, who could care less about their meager underfed employees/constituents.
Someone sent me an email today that listed all the department stores and chain stores closing. The email was to warn that if you buy a gift certificate with one of these, by the time a recipient goes to claim it, the place may be gone, doors shut, inventory sold to one of the 3rd world nations we're now likely indebted to.
The trickle down economics that impeded living wages to the many, now forces the doors to close on the capitalists who own these meccas of manufactured desires. Just as the car companies went for quick profits in designing the behemoths, knowing that oil was getting scarcer, global warming intensifying. Instead of doing the RIGHT thing and adjusting profits in a new green game plan, they went for the quick buck and now they come begging. Many of these fiscal events pose cautionary tales for exactly how NOT to do business, how NOT to treat customers/clients, and most essentially, how NOT to treat the Mother Earth.
So let me get this straight. "We" bailed out the banking industry so they could supposedly help the people who were being foreclosed on, but now those same banks aren't lending any money to "We" (they're just partying with it, apparently). And now the auto industry wants "We" to bail them out, too, so that they can make new cars that "We" can't buy because the banks aren't lending the money that "We" gave them?
Hmm.. wonder where they're gonna go to party?
Two items on ZNET related to this item are interrelated and must reads: http://www.zmag.org/znet/viewArticle/19692
http://www.zmag.org/znet/viewArticle/19665
The actual unemployemnt rate is way beyond 6.5% as noted by the "U6" and "SGS Alternate" measures, 12% and 16%, respectively. I predict that no "agressive action" will occur before unemployment shoots beyond a U6 20% figure, which will likely occur after what will be the worst retail "season" ever spawns even more baunkruptcies.
Good job. Of course the reason for this discrepancy is that back around the late 70's/early 80s or so, the government redefined unemployment, so that it no longer included workers who had used up their unemployment insurance, or who had given up looking for a job. If you couldn't find a job, at least you were no longer unemployed! There was not enough outcry at the time, that the new figures would always fail to reflect reality, and people often forget this fact today. The Augmented Unemployment Rate, which includes people who have given up looking for work, is always higher, often double what is reported as Unemployment by the Federal government. Americans should be incensed that their government would resort to a scam to convince us that unemployment is always lower than it actually is.
The fact that Hank Paulson continues to ignore the Foreclosure Crisis, while handing out $Billions to the finance industry, just answers the question I asked at the beginning of this crisis: "Who do we think Paulson will be loyal to, the American People, or the industry that made him rich?" His loyalty to the American People, which he is sworn to uphold in his position as Secretary of the Treasury, is clear: he has none. He could have patched up the entire economy crisis at a stroke if he had chosen, i.e. permitted, a bottom-up solution. The homeowners would have gotten a fairer deal, and would have kept their homes, while the mortgage industry would have been rescued as mortgage holders made their payments. The finance industry would also have been rescued as their mortgage-backed securities would have been good again.
Of course all parties would have to absorb significant losses, which are due especially in the cases of the mortgage and finance industries, which took dangerous, irresponsible risks with other people's money. The entire economy would have been protected from the huge, complete losses that failure of as many as 7 million+ mortgages would cause. But the finance industry did not want to take reasonable losses and survive, it wanted a free handout, which Paulson cheerfully gave it. Paulson is a TRAITOR to the American People, who must be treated as such. He SHOULD be prosecuted for his crimes.
That said, the economy could STILL be saved with a bottom-up solution. The balance of the $700 Billion allotted for the bailout must be returned to the treasury, while banks who benefit from the $350 Billion already distributed must not be permitted to foreclose on homeowners, must retract foreclosures in progress, and begin lending again. Mortgages must be re-written so that homeowners can afford them, at their bank's or mortgage company's expense, NOT the taxpayer's. And strict regulations must be enacted, to govern the behavior of all corporations, not just mortgage and finance banks, to prevent additional, crass, anti-public malfeasance in the future.
Private corporations must not be permitted to make huge profits off the American People, while the People are being required to absorb their losses. That's CORPORATISM, a form of FASCISM, which I don't think ANYONE, except a few (maybe most) greedy capitalists, really want to promote.
These unusually irresponsible, unpatriotic and immoral* companies must be made to absorb their own losses. Only then will the term "free market" mean anything at all, other than a euphemism for Capitalism.
*Capitalists are, in their own words, "concerned only with maximizing profit," and are "responsible only to their stockholders." There is nothing there about patriotism or morals.
Sioux Rose
YANKEE2: Sane, sound solutions. How I wish we'd see them implemented.
... as Foreclosures Mount what will Tiny Tim do?
Will our Commander-in-Grinch steal his last Christmas too?
What a clueless article.
Since no restrictions on the usage of the trillion dollar 'bailout' existed, it was blown in executive pay and mergers. These companies that don't have a clue about loans should be allowed to fail. It's what 'free market' is all about.
"Free market" is, of course, just a euphemism for "Capitalism," and in practice, means nothing else.
Something i saw on a newswire...
President-elect Barack Obama indicated Sunday that he may revive the concept of the Fireside Chat introduced by Franklin Roosevelt in March 1933 when he spoke to the nation about the bank crisis. ("Some of our bankers had shown themselves either incompetent or dishonest. ... They had used the money entrusted to them in speculations and unwise loans," Roosevelt said.)
That's a great idea!
Everyone wants to attack Obama for supporting the bailout. Perhaps he just needs the proper forum to explain the nuances of his position.
OBAMA: “If you – the American taxpayer – are not getting your money back, then we will change how this program is being managed. If need be, we will send new legislation to Congress to make sure that taxpayers are protected in line with the principles that I have put forward,”
He repeated his call for what he calls a Financial Stability Fee on the financial services industry to repay Americans in case the rescue plan results in losses.
“As I modernize the financial system to create new rules of the road to prevent another crisis, we will continue this fee to build up a reserve so that if this happens again, it will be the money contributed by banks that’s put at risk,”
“Let me be very clear: when I am President, financial institutions will do their part and pay their share, and American taxpayers will never again have to put their money on the line to pay for the greed and irresponsibility of Wall Street.”
It is no surprise that the former Wall Street douche bags now occupying the Federal Reserve and Treasury Department should look to their own interests only and screw the rest. Another blast from the past that needs to come back with a vengeance is the visceral loathing and distrust of Wall Street that my grandparents and their ancestors had. It is well past time that Congress actually fulfill its constitutional duty and put these scum bags under the media microscope.
www.wunderman-comics.com
What I'm curious about is -- who are the "we" that can't get a loan and why? If they can't get a loan because they aren't qualified, then it shouldn't be made. Maybe "we" are just plumb borrowed out.
What I also don't understand is with all the interest rate cuts, mortgage loan rates are higher now than they were in January. At my local bank it was 5.18% (yield for 15 year fixed with 1 point) and now it's 5.91%. Let people refinance to a lower rate and we'll see fewer foreclosures and the economy pick up. Still, wages are the key in the long run not cheaper borrowing. The damage from borrowing is done. If people had adequate wages, they could repay the loans.