Economists, Obama administration at odds over role of mortgage debt in recovery
One year and one month before President Obama won reelection, he invited seven of the world’s top economists to a private meeting in the Oval Office to hear their advice on what do to fix the ailing economy. “I’m not asking you to consider the political feasibility of things,” he told them in the previously unreported meeting.
There was a former Federal Reserve vice chairman, a Nobel laureate, one of the world’s foremost experts on financial crises and the chief economist of the International Monetary Fund , among others. Nearly all said Obama should introduce a much bigger plan to forgive part of the mortgage debt owed by millions of homeowners who are underwater on their properties.
Obama was reserved in response, but Treasury Secretary Timothy F. Geithner interjected that he didn’t think anything of such ambition was possible. “How do we get this done through Congress?” he asked. “What could we actually do that we haven’t done?”
The meeting highlighted what today is the biggest disagreement between some of the world’s top economists and the Obama administration. The economists say the president could have significantly accelerated the slow economic recovery if he had better addressed the overhang of mortgage debt left when housing prices collapsed. Obama’s advisers say that they did all they could on the housing front and that other factors better explain why the recovery has been sluggish.
The question is relevant because although Obama won reelection this month, the vast majority of voters still say the economy is weak and not getting better. Policymakers in Washington are now focused on another type of debt — the public debt all taxpayers owe — but the slow economic recovery, which depresses tax revenue, makes that problem harder to solve.
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Well Kimberli, the unfortunate truth is, this fraud began at the Origination of ALL of these credit purchases. It took several months to get approved for my purchase and I put more than 20% down and had top notch credit in 1992 when I made my original purchase. When I refied, I still had top notch credit. This fraud began in 1982 is what I have been told, and it had nothing to do with anything we did wrong. The banks via Wall Street oversold credit by $700 trillion dollars so it is way past time to stop blaming the victims. People lost their livelihoods because of a Quadrillion dollars in credit fraud committed by Wall Street without our knowledge and that is the only reason why we are here fighting fraudclosure.
@ Kimberly Wilson – what you are saying is both untrue and won’t work. First of all, the banks are lending at low rates; mqaybe not 2% but certainly in the 3’s. What they have done is add on ‘adjustments’ to those mortgages that are under a capped loan amount (i.e. mortgage loan amounts of $70K and under). Secod, your idea to allow someone with bad credit and 50% down to get a mortgage….that notion is so few and far between it is almost funny. Most Americans that (now) have bad credit is solely derived from job loss, rising mortgage rates on adjustable rate mortgages, rising cost of homeowner’s insurance. More than likely if a person had sufficient capital of 50% down to buy a house the likelihood that they would have bad credit is rare. But when a family incurs a job loss which turns into loss income the average person will devour savings in order to maintain existing debt. You can’t do a pre-aranged DIL on a mortgage. First of all, it’s illegal and second, even if it were legal, it just gives the ‘bankster’ more fuel to fabricate more paperwork to use the DIL and continue to steal homes! And as to those you classify would receive ‘no money down’ because they are retired and receiving a pension….WOW! where were you when the stock market dumped and thousands upon thousands of pension funds lost millions and millions of dollars? Let me make it clear that ‘nothing’ is forever or guaranteed – not even pensions. When the faucet runs dry there ain’t no mo watah! Even social security at this point is not sure to last out the next 10 years. However, it was never anticipated to fund all the welfar receipients and illegals either. Many people, like myself, have come to the realization that any plan for retirement is out the window. I’ve worked 42 years of my life @ at aged 60 I will never be able to retire as I had planned. Cost of living is out of control, food, energy, medical, gas and the list goes on. Many of those now on ‘fixed’ incomes are finding it increasingly harder and harder to survive and the idea of entering the working field….hahahahaha…like there’s no competition for jobs let alone someone past the age of 50. I don’t have a solution either but one thing is for sure. There must be a total forgiveness of fraudulent mortgages and the responsible parties within the banking industy must be tried and jailed, Heck, Fannie & Freddie are already essentially bankrupt and so any losses wouldn’t hurt much, Confiscate the overseas accounts set up by the banksters and return the stolen monies to the taxpayers.
The only way to speed up the recovery is to reverse the rule that restricted the demand for housing in the first place. The first solution was to require 20% down instead of 10% down making the problem worse with less potential buyers. The next solution was lower interest rates so now the banks do not want to loan money because there is no profit with 2% loans so this solution actually created 2 problems. The banks laid off 160,000 employees increasing unemployment and the banks will not loan money because it is not profitable. So, the next solution is bulk sell these properties and turn them into rentals because they are piling up because the other solutions made the problem worse. The results of this will turn neighborhoods into transient, unstable neighborhoods that are not safe. Very destructive solutions so far. Here are some samples of who could increase demand which is the smart solution. If credit is damaged because of medical only and the medical condition is fixed give them a loan. If someone have bad credit and can put 50% down give them a loan with a pre signed Deed in Lieu of foreclosure if the buyer gets 3 months behind on payment, where is the risk now? The house is sitting empty deteriorating bringing in no money and you get 50% up front. Even if they default in the fastest scenario 3 months the bank got 50% down and can put the home back out there and a default would be highly profitable. If someone has great credit, a pension and does not need a job to even make the payment “NO MONEY DOWN”. They cannot loose their job or their income where is the risk? You can buy furniture and cars with no money down so find every scenario where no money down can apply for homes and watch the economy boom! Think of all the builder jobs created fixing up these homes! Switching symptoms and making new ones is not a solution and makes the problem worse. There are not enough “perfect” buyers thanks to the banks. The solution is out side the box and requires working with people that are not “perfect” with a pre signed deed in lieu that can make a house payment. If you apply basic ecomonics, the time to loan money to people with perfect credit is when supply and demand are in balance.
As I have said before, take a look at Iceland. They forgave to start 25% of their domestic debt, tried and jailed several crooked bankers and then later on, reduced domestic debt some more. Their economy is really good after they took care of the BS, and it is getting better. Ireland has also done some of the same things. The bankster ripoff banks are the problem. Nail them, not the people of America.
Subprime was not the problem. It was the structuring of the mortgages as 10 year bonds. They sold us 10 year bonds not 30 year fixed conventional mortgages. The FEDSTERS and the banksters set US up to fail. When the bonds matured and were worth more than the dollar the Wall Street firms who created these bags of puss…Insider traded out of them…they had their investor cohorts buy out these pigs and crap so they could all cash in their faulty credit default swap insurance…fraudclose….get bailed out until they bankrupted us and by the FED repurchasing the soured insolvent debt…they could sell back their own garbage to their investor cohorts and then all of our foreign enemies who intentionally caused this fake crisis would be invested in the manufactured demise of our nation and their Globalist meme…the nation of RENTERS fraud theory these crooks created by committing a quadrillion dollars in fraud with our forged signatures and counterfeit securities.
As one of the many millions of homeowners who lost their property value due to subprime lending and then found herself facing foreclosure because Bank of America did not feel it necessary to work with me, but did seem to find it necessary to ensure the bonuses to those who got us here were paid. Those of us who had minimal debt and credit ratings in the 800’s never imagined a day where we would lose everything because the politicians and bankers saw a way to line their pockets. They sit in their ivory towers and justify not forgiving any mortgage debt as being morally wrong. But throwing families out on the streets, destroying their credit so they can never own another house, rent or finance a car is okay. I grew up in a time when there really was this attitude we were all in this together. As a country we have lost that sense of community, a sense of helping those in need and we have embraced the notion of greed being good. My children and me did not ask to be impoverished, homeless and uninsured. We worked all our lives and at a moment when we needed help there was none. I supported Obama because the thought of a Romney presidency made me see soup lines and it scared me. I don’t know if this country can ever find its way back, but we need to have a discussion on whether it is too much to ask to have a roof over your head, food in your stomach and the ability to see a doctor when needed. I fear we never will get back to that ideal and that is sad.
Oh, I love this one! All taxpayers owe the public debt….that same debt from the Bailout that was used to ‘rescue’ the banks and the same banks that used fraud to inflate equity, seize homes, manipulate the libor rate, zero dollars backed mortgages. And oh, let’s not forget the bailout that paid their F**** bonus. This is almost too comical but unfortunately very real. Second term hasn’t even officially started….not much to look ‘forward’ too now is there? Climbing national debt, rising unemployment & welfare rolls, rising delinquency on mortgages and higher filings of foreclosures nationwide. I do hope that everyone got a chance to run down to the local retail store for their IPad on Black Friday along with the big-screen TV, stereo, laptops, computer games….ya know, all the really ‘important’ stuff! Darn good thing we have American Express, Mastercard, Visa and all compliments of the SAME banksters who are defrauding this country!!!!!!! And I repeat: Stupid is as stupid does.