Wednesday, September 05, 2012
Government Is The Problem - Not The Solution
Do you know people still living in their homes after defaulting on their mortgage payments? I do, and I wonder what that must be like. Some have been doing this for two years or more, so why doesn’t the bank evict them and auction the house?
Because it’s afraid to. Because then the bank would have to sell the house for whatever it would bring on today’s real estate market - and that would be much less than what the bank pretends it’s worth. Because it’s likely the bank has several such properties - along with other banks - and all those houses are valued at what they were worth five years ago and would sell today only at far less than the amount owed on them. They’re counted as assets on the bank’s books at no-longer-realistic prices. If banks dumped all that on the market, it would further depress real estate prices and put more mortgages underwater.
How long can this go on? Not forever. The banks keep putting it off hoping the economy will turn around and real estate prices will bounce back. Soon-to-be-former mortgagees can’t live rent-free indefinitely and they know that sooner or later they’ll be evicted - but they ride it as long as they can. They keep heating the place, shoveling the snow and mowing the lawn. The bank allows this to prevent values from sinking even further should the occupants move out and nobody took care of anything.Consider the uncertainty these circumstances generate. What if the roof leaks? The occupant thinks: “I should fix the roof, but this isn’t my house anymore. I’m a squatter here.” Will he tell the bank or just put a bucket under the leak? Bank and occupant let it ride. They wait to see what happens.That uncertainty is very similar to what most Americans feel about our country. We know we’ve dug ourselves into a deep, deep hole we may never climb out of, but we’re letting it ride to see what happens. Serious investors won’t make moves until they see what happens in November’s election while the “Hope and Change” guy presides over a country increasingly hoping for change in who occupies the White House.I began writing this column on Sunday. On Monday, the Daily Caller published a story titled: “Obama: Subprime Pioneer,” and subtitled: “With landmark lawsuit, Barack Obama pushed banks to give subprime loans to Chicago’s African Americans.” It details the crucial role now-President Barack Obama played to accelerate the subprime mortgage crisis while a “community organizer” in Chicago. He was lead attorney in a lawsuit against Citibank on behalf of 186 black clients. Obama claimed Citibank was refusing to lend to his clients because they were black, and not because they were bad credit risks. He won and got his fee. His 186 clients got cash settlements and got their loans too.
What has happened since? According to the Daily Caller: “by July 2012, Obama’s 186 clients had received at least 188 bankruptcy and foreclosure notices.” Only nineteen continue to own homes.
That is simply staggering. By his actions in 1994, our community-organizer-in-chief helped engineer the sub-prime disaster and resultant collapse in real estate prices at the root of America’s economic debacle he’s been blaming on Bush for four years now.
Barack Obama used the government court system to force banks to lend to people who should never have gotten loans because they were unqualified to pay them back. Then government-backed Fannie Mae and Freddie Mac bought those shaky loans and guaranteed them. Unscrupulous Wall Street investment banks rolled those government-backed sub-prime mortgages into other financial products to be bought and sold willy-nilly and few of them understood who would be ultimately responsible when the bad mortgages defaulted. It ended up being the taxpayers of course. We bailed out almost all of them and now we’re left with a government-created “Great Recession” as it’s being called now.How did this story of the our community-organizer-in-chief’s involvement go unreported so long? Well, we should know the answer to that question. The Mainstream Media gave him a pass. Candidate Obama wasn’t vetted - not publicly anyway. They’re not vetting now-President Obama either even though he’s blaming banks for doing exactly what he sued them for not doing! His administration claims the banks wrote “predatory loans.”Our president claims he “inherited” the massive problem he actually helped create. He would use government to get us out of what he used government to get us into. He's knowingly guaranteeing mortgage loans on homes for more than they're worth! It takes a lot of brass, but that’s what he’s doing. Will he get away with it? We’ll see in November.The newest Democratic National Convention video claims “Government is the only thing we all belong to.” That’s what is fundamentally wrong with the Democrat Party. We don’t belong to government. Government belongs to us.