Foreclosure Moratorium, or Else!

by lizard

I think we’re about done. We may sputter on in some fractured form of gangster capitalism, but any hope public-driven democratic principles can survive our converging political/economic/environmental crises, at least for me, is virtually gone.

The most populist thing Obama could do right now to save his party and (though many would never admit it) the majority of ALL Americans is slap a moratorium on ALL foreclosures and convene the biggest goddamn investigation of the fraudster big bank lenders and semi-privatized institutions (like Fannie and Freddie) this country has ever seen. And take it primetime!

But no, this administration can’t even muster supporting a temporary foreclosure moratorium(fuck you, Axelrod).

I guess they would prefer people kicked to the streets no matter how much evidence of fraud is bubbling to the surface. I guess there’s still some drops of liquidity to squeeze from us peons as our politicians use foreign cash to sell us their various flavors of bullshit.

I guess they’re not done with us yet.

Well, I’m done with them. If the next two years proceed like the past two, the party must be abandoned no matter what the cost.

*

Sometimes I day dream and the craziest thoughts float into my brain.

Like, I imagine a president with guts. I Imagine Obama saying he doesn’t give a damn if he’s not elected if it means saving us from this sinking ship. I imagine him demanding these predatory lenders produce physical documentation that they own and can thus foreclose these homes. Any bank without hard evidence (because they played the derivative casino and lost) must null and void the mortgage.

Imagine a president that says:

TOUGH SHIT, GUYS, THE LETTER OF THE LAW SHOULD PROTECT EVERYONE EQUALLY, AND YOU GUYS LET GREED BLIND YOU AND IT CAUSED YOU TO DO SOME REALLY SCREWED UP THINGS THAT ARE ACTUALLY ILLEGAL SO JUST BE GLAD I’M NOT CONTEMPLATING A LENDERS PRISON LIKE THE DEBTORS PRISON YOU TRIED TO PUSH ON AVERAGE AMERICANS.

And do you know what the beauty of this would be? If the banks couldn’t absorb the consequences of their fraudulent lending and trading practices because they were grossly overleveraged, and they go broke and are forced to sell off their assets at fire-sale prices, and they complain like the little petulant entitled delusional sociopaths they are, this is what my imaginary president with guts would say to them (and their howling political sycophants on the right):

WHADYA THINK ABOUT THE FREE MARKET NOW ASSHOLES?!

But it’s not just American citizens who are getting screwed. Michael Hudson, my favorite economist, explains how Wall St. and The Fed are taking their insane fiscal clusterfuck global. Are they idiots, insane with greed, or is this economic warfare like the article suggests?

I don’t think the answer matters.

They just have to be stopped.

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  1. Uhhh, no offense meant, lizard, but it actually seems that more Americans want something done about jobs. Just sayin’ …

    ‘Course if it helps any, Republicants are even worse than the White House on that. Ya’know, value of the yuan, and all that. Again, just sayin …

    (No, this comment wasn’t meant to be more than peripherally substantive, but then the post wasn’t either. Rage, rage against the dying of the thought, and all that, ya know.)

    • lizard19

      wulfgar, you can’t isolate “jobs” from the housing bubble collapse.

      the most valuable thing most americans will ever own is their homes.

      when the bubble burst it wiped out over a trillion dollars in value. that cripples the american consumer, which is 2/3 of this entire economy. this debtor death spiral is part of why the economy won’t recover any time soon, which will keep confidence paralyzed, which will keep anyone from hiring or investing in the creation of american jobs.

      the housing collapse and potential for job creation are interrelated.

  2. A complete moratorium would pretty much be license to stop making mortgage payments. I support cramdowns and a bunch of other moves to get away from people being underwater on their mortgages, but stopping foreclosures is a bit far for me. Unless I’m missing something, which is possible, of course.

    • lizard19

      the way i imagine it is simple. banks must produce proof of ownership. plenty of banks would have no problem doing this in short order if it meant they wouldn’t get paid. the banks that can’t produce proof weren’t lending responsibly. they should eat it and debtors walk clear.

      if something doesn’t happen to protect homeowners from the foreclosure machine, housing will continue to drag the economy while wall st remains engorged on our dime.

    • JC

      You think that threat of foreclosure is the main incentive for the vast majority of homeowners to keep paying their mortgage? Sheesh. If you really think that is the only thing that keeps the system alive, then capitalism is already dead and everybody might as well quit paying on all debt owed.

      Most homeowners (and they still are a strong majority) are in fine position on their mortgages. They have many other reasons to stay current, and a moratorium will have no effect on their desire to be responsible homeowners.

      NOw the other 20-25% of homeowners who are in trouble, sure, they may decide to stop paying for a while if foreclosures are put in a moratorium. So what if they do?

      The system, one way or another, led them into that position. And if they don’t pay their mortgages for a few months, who’s it going to hurt? Banks? Who gives a sh*t about the banks? And the money they don’t spend on mortgages they can use for other things, like food and healthcare and fixing the car and buying clothes, etc. You know, things that stimulate the economy.

  3. I’ve been following this issue since before the bubble burst, but when others were saying it was going to happen.

    As for recently, Obama did pocket veto a bill that would have saved the industry from having to halt foreclosure operations.

    And that bill had come forward to keep the banks going in what is illegal – clearly illegal in 10 states – practice of having robo-signatures placed on foreclosure documents.

    Halting foreclosures is all the fashion – Bank of America had halted them in 10 states and just recently expanded them to every state in the union.

    Goldman-Sachs is on the same path….

    Frankly – what I’m more curious about is how did a bill designed to protect the industry get past both chambers of congress? Who voted for this shitty bill that would have ensured that foreclosures would have continued forward, despite the fact that it is a process run amok?

    CNBC gives a nice pedestrian version of the timeline on the recent foreclosure porn. Worth the read.

    • lizard19

      thanks j-girl. great links. and some new info for me. didn’t know about the pocket veto.

    • JC

      Actually, the bill wasn’t designed to have anything to do with foreclosures. It was a bill about notarizations, particularly in respect to cross state border notarizations, and electronic notarizations. The bill originated in 2005 (before the bubble and foreclosure crisis was even acknowledged by mainstreamers) at the request of the national organizations of notaries to clarify notarization, and bring it into the internet age.

      Unfortunately, as an unrecognized side effect (except maybe the banks knew about it eventually and pushed it quietly) the bill would allowed banks to use some practices that it had before the bill was passed to do some shady paperwork.

      So, yeah, the veto was good. The bill can go back and get rewritten so as to not have any weird side effects like giving the banks an out, and it will pass again.

  4. The Polish Wolf

    Yeah, I was going to bring that up – Obama is clearly more on our side than the nervous Democrats in the House and Senate.

    Moreover, what is the ‘or else?’ that we have? We (the voters) have no ‘or else’. Foreclosure moratorium or else we elect in Republicans to remove all the restrictions we already put in place? Foreclosure moratorium or else we elect Republicans to lower taxes on the richest two percent of Americans? Progressives are in no position to be making demands. How many people would get out of their foreclosure during a four month period between now and Republicans making it even easier to foreclose? Not enough.

    • lizard19

      progressives are in no position to be making demands? wow, that’s defeatist, and pretty depressing.

      if something substantive isn’t done about the housing scam, falling prices will continue dragging the economy down. again, debtor death spiral. people much smarter than i am are making grim predictions.

      that’s the “or else.”

      • The Polish Wolf

        Fortunately, the Banks are doing just that – most of the largest ones are re-checking their foreclosures before they let any more go through. But to demand government intervention seems rather futile, given that as jhwygirl pointed, congress would rather make it easier.

        Obviously there are consequences to this lack of action. I merely mean, who do we vote in if we throw the bums out? The TEA Party, for all its populism, hasn’t exactly taken up the banner of the foreclosure moratorium. Now that we’ve saved the banks, the closest thing we have to an ‘outsider’ movement is talking about how we should let them go their merry way. The real question is, how do we make people remember anything for more than a couple months, so that they don’t embrace the ‘outsiders’ who are merely heralding a return to what was business as usual two years ago.

        • Best I could tell, HR 3808, the Interstate Recognition of Notarizations (IRON) Act passed the House with minimal debate and an (at least) 2/3 voice-vote.

          Voice vote.

          Some special procedure in the Senate just moved the thing forward by unanimous consent.

          Unanimous consent.

          How’s thems potatoes?

        • lizard19

          if you think government intervention is futile, then it seems you’ve already thrown in the towel.

          i don’t necessarily disagree with you. but you have to realize the reason its futile is because the system is so corrupt, the revolving door between big money and public office ensures status quo, not matter how deeply our national economy and the global economy get fucked.

          i recommend the hudson piece. there are global consequences to what we allow wall st to get away with.

    • I viewed this vote as not only consumer friendly, but pro state’s rights.

      Many states were opposed to this bill because it overrode any state regulations regarding authorizations.

      Ultimately, there’s blame to be made on the foreclosure situation, and it isn’t 100% banks.

      I think what we are gong to see is a slowing down of the foreclosure situation and maybe even a clogging of it as State AG’s start looking into whether minimal legal procedures are being followed.

  5. lizard19

    check out nobel laureate Joseph Stiglitz on Democracy Now today talking about the foreclosure crisis.

    what is it going to take to get Obama to act?




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