Winner Takes All | Federal Reserve Bank Researchers Proposed Bailing out 99%, Action not taken

Federal Reserve Bank Researchers Proposed Bailing out 99%, Action not taken

For Immediate Release: Federal reserve bank researchers proposed plan to save people from foreclosure, and through them the banks and the financial system. Action not taken by government.

CAMBRIDGE, MA December 20, 2011 – The US government saved the “too big to fail” banks in 2008. The reason? People were unable to pay their mortgages causing the banks billions in losses. The US Government authorized $700 billion to save the banks. The Federal Reserve Bank also gave them short-term loans that were even larger.

According to a report of the Federal Reserve Bank of Boston, there was another way. Why not save the people who were at risk? If the people were helped, they would be able to pay their mortgages, the banks would not have needed to be rescued and the financial crisis would have been considerably less severe. The cost? They calculated up to $50 Billion dollars overall – less than 10% of what was approved for banks.

Refined variants of the proposals that the researchers have worked on would reduce the amount to just $1 billion dollars, the interest cost of deferred payments, which could be paid either by borrowers or servicers.

The Treasury decided to bail out the banks instead. At the time the US Treasury Secretary was Henry Paulson, previously Chairman and Chief Executive Officer of the investment bank Goldman Sachs.

According to the study by the Federal Reserve Bank of Boston researchers, the people who were at risk were those who lost jobs and had mortgages for more than the value of their homes. Just by helping these people a little to get by until they had another job, their problem would be solved. If the people were bailed out, there might not have been a need to bail out the banks at all.

The Treasury considered other proposals to help homeowners and came up with the Home Affordable Modification Program (HAMP). The HAMP program modifies loans only if it is beneficial to the lender to do so rather than foreclose, and typically will not help unemployed borrowers who can not make payments. The program was not effective, the number of mortgages that were permanently changed was under 200,000 after a year and a half.

Over 20% of the mortgages today are under water, people continue to be foreclosed and the economy is at risk. The plan proposed by the Boston Federal Reserve researchers could still be implemented.

A remarkable new twist to the OWS shout: Banks Got Bailed Out, We Got Sold Out!

Three authors of the study, Chris Foote, Jeff Fuhrer, and Paul S. Willen are research economists at the Federal Reserve Bank of Boston. A fourth, Eileen Mauskopf, is Associate Professor at the Johns Hopkins Carey Business School, and, until this year, was a research economist at the Board of Governors of the Federal Reserve System.

One of the authors, Jeff Fuhrer, is a high level Federal Reserve Bank official, and has recently become a co-faculty of the New England Complex Systems Institute.

To view the full report, visit:
http://www.bos.frb.org/economic/ppb/2009/ppb091.pdf

Jeffrey Fuhrer can be contacted at the Federal Reserve Bank of Boston
http://www.bos.frb.org/economic/econbios/fuhrer.htm

Jeffrey Fuhrer’s NECSI co-faculty webpage
http://www.necsi.edu/faculty/fuhrer.html

Press Contacts:

Karla Bertrand, Press Relations
karla@necsi.edu, 617-547-4100

Clare Froggatt, Program Coordinator
clare@necsi.edu, 617-547-4100

About NECSI: The New England Complex Systems Institute is a research and education institute based in Cambridge, MA. A pioneer in the field of complex systems science, NECSI addresses questions previously considered to be outside of the realm of scientific inquiry. Its research draws on foundations from mathematics, physics, and computer science to solve pressing problems in such areas as economics, healthcare, education, military conflict, ethnic violence, and international development. Its goal is to expand the boundaries of knowledge and to solve problems of science and society.

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4closureFraud.org

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Shelved Bail Out People Proposal

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Comments
7 Responses to “Winner Takes All | Federal Reserve Bank Researchers Proposed Bailing out 99%, Action not taken”
  1. Fred Jackson says:

    Politicians, regulators, judges, press – the millions of little fish don’t really matter to the owner/ruler class.
    .Many judges come right from the powerful Law Firms dedicated to Banksters and Corporate profits.
    A backstop to make sure fraudclosures proceed unihibited.

  2. Beth A. says:

    Further…all mortgages that were consumated and involve fraud should be canceled.

    A contract based on fraud is normally void under the law…but somewhere along the line bankers and certain judges apparently forgot this.

  3. Ron Moss says:

    Congress can be given it’s own responsibitity by repealing the Federal Reserve Act which realluy shoul have been a constitutional Amendment to change “Congress ahall have powere to coin money and regulate the valut thereof” to give it all to alan Greenspan or Ben Bernanke.

  4. Susan Johnson says:

    The Government couldn’t take any action since it is under the tight control of the financial sector. Die, Bank of ‘MURICA!

  5. Fred Grundy says:

    People are never going to idly stand by and let preventable suffering, malaise and tragedy continue for too long.
    Why aren’t the smart guys being listened to? Whose country is it?

  6. Katheryn says:

    In three days, most people in The United States of America will have the message. This is one idea that really should be passed
    around.

    _*Congressional Reform Act of 2011*_
    1. No Tenure / No Pension.

    A Congressman/woman collects a salary while in office and receives no pay when they’re out of office.

    2. Congress (past, present & future) participates in Social Security.

    All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into
    the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

    3. Congress can purchase their own retirement plan, just as all Americans do.

    4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

    5. Congress loses their current health care system and participates in the same health care system as the American people.

    6. Congress must equally abide by all laws they impose on the American people.

    7. All contracts with past and present Congressmen/women are void effective 1/1/12. The American people did not make this contract with Congressmen/women.

    Congressmen/women made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers
    envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

    If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Don’t you think it’s time?

    THIS IS HOW YOU FIX CONGRESS!

    If you agree with the above, pass it on. If not, just delete.
    You are one of my 20+ – Please keep it going, and thanks.

    • notmyhomeyournot says:

      I agree with you and have posted a similar idea several months ago. The whole problem with the government is just plain favoritism towards industry and the monetary system. The government has always done the opposite of what should be done, as a plan that never worked for the people, and just made the problem bigger while the lower people went broke. The government only has to do one simple thing, and that one thing does not take any education, or financial genius to do, and it would not take years to go into law. That one thing is…………….Treat the problem, not the symptoms, always a cover-up, never a solution. I say if you are not part of the solution, then you are part of the problem. By helping the people get back on their feet, would have changed the whole situation as you stated. If the people were given other solutions to solve the problems, they would have done it themselves, and everyone would have been allot better off. Just like the corporate welfare, why do large corporations get huge grants to sell overseas, when giving more people jobs here would have boosted their bottom line. If they treated the workers better, there would be better products on the market here. The shove all the jobs overseas tax free, and holding all the Americans hostage by keeping us poor, and make more laws of how we small business owners can do business. The people should be left alone and should not be charged taxes for having a job. We should be taxed for what we use, not for what we earn. Drivers should be taxed only for road taxes. Workers should not be taxed for work they supplied labor for. Pennsylvania has all kinds of taxes for stupid things like a head tax? Income tax, local tax, state tax, county tax, and for what do we receive in return for these taxes? We pay school tax for what? the kids are dumber then they were in the 60’s when they decided that the people are to dumb to take care of their affaires at home, and all of a sudden they deem that we cant take care of our children, so the over rule us in the home, on the road, in government, everything we do we have to get their permission to take a crap, and get charged for that too. Water does not cost anything but the pumping charge, but we get charged for that too. Bottled water, don’t get me started……….filtered tap water that’s what you pay $1.00 for at the minimum. We pay tax on gas? why don’t the gas producers pay the tax, they are selling for a profit. Why do the consumers pay the sales tax? because they think they are more intelligent then the little man. Auto licence and tags should be banned, we should not be charged every few years for a drivers licence, it does not prove that paying for a licence makes a better driver, so whats the excuse? There are so many taxes before during and after you get paid that 75% actually goes to paying taxes to a corporate entity called federal reserve who by the way does not pay taxes on their huge profit from printing counterfeit money, that did not cost them but a penny or two to print, then lend it to the government for a profit, and control the whole financial business sector, in the betterment of corporate greed. When do we humans decide to take charge and destroy the corporate sector and start over, with a system that only does good for humans and living lifeforms.

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