Who Truly Caused the USA and Worldwide Financial Crisis of 2008?
$17
Trillion National Debt, September, 2013
Is this true? No!!! It is absolutely false.
The United States National Debt Is a Lie!
Federal Reserve
Chairman, Benjamin Shalom Bernanke, has taken care of it.
The true USA national debt in bonds to people, businesses, and other countries is most likely not more than $3 or $4 trillion. Will the USA default on the debt? Absolutely not. This is why. The USA Secretary of the Department of Treasury prints a $500 Billion bond on his Canon inkjet printer. He sends the bond to Benjamin Shalom Bernanke, Head of the Federal Reserve. Mr. Bernanke buys the bond by sending an electronic credit in the amount to the account of the Department of Treasury. Mr. Bernanke tell the Secretary of the Treasury to have no concern about the maturity of the bond. Mr. Bernanke walks over to his paper shredder and drop the bond down the inlet chute along with several parking tickets. No problem!
The same goes for United States Treasury bonds held by individual and the governments of other countries. The U.S. Federal Reserve has been buying these bonds with printed money at the rate of $85 billion per month for several years. This action is called "quantitative easing" or QE. The Federal Reserve simply drops the redeemed bonds in the shredder. No problem! This does several things. First, it balances the increase in money supply throughout the world with the increase in the money supply in the United States. This tends to keep currency exchange rates constant. Second, it reduce worldwide deflation that was caused by the 2008 worldwide financial crisis. Third, one downside effect is the increase in inflation in some foreign countries, but the Federal Reserve considers that to be their problem not ours.
The governors of California and Illinois along with mayors from Chicago and Detroit give Mr. Bernanke a call. They have some bonds to sell also. No problem!
Who are the stupid, ignorant, thieving critters who caused the accumulation of a massive amount of toxic subprime mortgages that were dispersed throughout the U.S. financial system and worldwide to cause our current financial crisis? The historical evidence is undeniable.
The Zionist Matrix of Power - Dr David Duke
Truth About Zionism, Israel, and the Holocaust
Who are the guilty parties?
Guilty Couple No. 1 - President Bill Clinton and Hillary Clinton (Democrats) promoted and approved a bill in 1996 to allow Freddie Mac and Fannie Mae to accept mortgages from poor, low-income home buyers who had no down payment and no verification of their ability to repay the mortgages. The down payment for conventional mortgages in previous years was 25%, but the new requirement was lowered to zero, none. This was a credit bomb in the making. The Clintons built a default trap. The reduced mortgage requirements were promoted to allow and encourage poor, inner-city blacks to buy a home in the suburbs. This bill was a pure Marxism and Fascism tempt to provide government support for single moms and irresponsible, lazy people -- sluggards. Hillary Clinton, being a liberal feminist, has been fighting against God's ordained plan for mankind that a family shall be a man and a women bonded in marriage with children to follow. Liberal feminists want to raise illegitimate children without a man in the house. Well, God won. The single moms defaulted on the house mortgage and have moved back in with their parents who incorrectly thought they were finally rid of the liberal-feminist, fornicating daughter.
Marxism is a form of government in which money is stolen from the hard-working, responsible citizen in the form of taxes and given to the lazy sluggard in the form of grants or benefits. Marxism is a one party government that does not tolerate opposition or disagreement from the citizens. Naturally Marxist governments are also become Facsist.
Fascism is a form of government in which money is stolen from hard-working, responsible companies in the form of taxes and given to lazy, irresponsible companies in the form of grants, special loans or total governmental control. Fascism is a one party government that does not tolerate opposition or disagreement from the citizens. Naturally Fascist governments are also become Marxist.
In 1999, the requirements for approval of a mortgage by Freddie Mac and Fannie Mae were reduced even further to allow home buyers to obtain adjustable rate mortgages (ARMs) based on the Federal Fund interest rate. These people were allowed to sign long-term loans based on variable short-term interest rates. President Bill Clinton and his wife, Senator Hillary Clinton, should be charged with treason. They are the worst enemies of the poor, inner-city blacks and illegal Mexicans who foolishly believe the Clintons are their best friend.
On October 14, 2008, Senator Hillary Clinton said, "It breaks my heart to see the U.S. in an economic crisis eight years after Democrats left the nation in sound fiscal shape." Wow! What a cover-up! Hillary Clinton was the author of her husband's policy in 1996 to relax mortgage requirements. Senator Clinton is pointing her finger at others, but she is the prime culprit responsible for our present mortgage and credit crisis. Bill was busy "training interns" at the time. Hillary is the prime culprit.
Hillary Clinton
She held no office, had no job, but destroyed the economy of the USA.Treason by Barack Obama, Hillary Clinton, Robert Gates, John McCain, Susan Rice, and Samantha Power.
Click the image to see an
enlargement.
H.R. 3019 - 1996
Title: Making appropriations for the Departments of Veterans Affairs and Housing and Urban Development"Authorizes the Secretary, subject to the consent of specified parties, to: (1) remove, relinquish, extinguish, modify, or agree to the removal of any mortgage, regulatory agreement, project-based assistance contract, use agreement, or restriction that had been imposed or required by the Secretary . . . "
House of Representative - Vote Database: H.R. 3019 [104th]:
Representative Newt Gingrich - Yea
Senate Vote On Passage: H.R. 3019 [104th]:
Senator Trent Lott - Yea
Senator Robert Dole - Yea
President Bill Clinton - ApprovedSenator John McCain - No
Senator McCain has not mentioned H.R. 3019 in his election run. He is so dumb he doesn't even know this bad bill caused the current housing mortgage default crisis. He could have used his negative vote on this bill for support to win the election. He probably doesn't even know why he voted against the bill.Laws are important. Laws can be very destructive. The one little sentence in H.R. 3019 - 1996 was intended to allow poor, inner-city blacks a chance to own a home in the suburbs. Instead, it has thrown the entire world into a credit, financial, and economic depression because those people defaulted on their home mortgages. Now those people are not only out of their homes, they are out of a job. Marxist policies which intentionally rob responsible, hard-working people and give the money to irresponsible, lazy people have been tried many times and always fail. Senator Obama is an ultra-Marxists to the core whose faulty goal is to create a worldwide Marxist utopia. We are slouching toward Gomorrah, not moving toward utopia. To best understand the faulty workings of Senators Clinton and Obama's Marxist, left-wing, liberal minds, read Judge Robert H. Bork's book, Slouching Towards Gomorrah: Modern Liberalism and American Decline. Judge Robert Bork was the awesome, conservative Supreme Court nominee who was wickedly trashed by Senator Joe Biden (another Marxist) in a move that has come to be called "being Borked."
President Bill Clinton and Senators Barack Obama and Joe Biden teamed up with Republican Senator Phil Gramm to write and approve a bill which deregulated the banking industry. This allowed brokerage companies like Merrill Lynch & Company and Lehman Brothers to become high-risk, unregulated investment banking firms. This eventually lead to the 2008 collapse of Merrill Lynch and Lehman Brothers.
Cause of the Crisis - Professor James K. Galbraith - May 1, 2009.
Who Caused the Economic Crisis? - FactCheck.org - October 1, 2008.
"The bill in question is the Gramm-Leach-Bliley Act, which was passed in 1999 and repealed portions of the Glass-Steagall Act, a piece of legislation from the era of the Great Depression that imposed a number of regulations on financial institutions. It's true that Gramm authored the act, but what became law was a widely accepted bipartisan compromise. The measure passed the House 362 - 57, with 155 Democrats voting for the bill. The Senate passed the bill by a vote of 90 - 8. Among the Democrats voting for the bill: Obama's running mate, Joe Biden. The bill was signed into law by President Clinton, a Democrat. If this bill really had "stripped the safeguards that would have protected us," then both parties share the blame, not just "John McCain's friend.""
Barack Obama has become the first illegal President of the United States. This is proof of his corrupt nature. He is not legally qualified to become president since he was born in Kenya, Africa. His mother was visiting relatives of his father who was also born in Kenya and was planning to return to the United States to give birth. However, she went into labor in Kenya, and Barack was born there. The people of Kenya are erecting monuments in celebration. Barack's mother returned to the United States with the baby where she quickly obtained a false birth certificate. The Republicans were afraid to challenge Obama's qualification because Senator John McCain wasn't qualified either. McCain was born in Panama, Central America.
Guilty Party No. 2 - Newt Gingrich (Republican) was elected Speaker of the House of Representatives in 1995 and presided over the approval of the Freddie Mac and Fannie Mae mortgage bill. The Republicans held a majority in both the House of Representatives and Senate during both of Clinton's two terms as President. Speaker Newt Gingrich and the Republications in the House of Representatives did absolutely nothing to stop the Clinton administration from reducing the home mortgage requirements in 1996 and 1999. Newt Gingrich and the Republicans approved the 1996 bill with a celebration.
$700 Billion Bailout Plan Prequel: Who Started the Subprime Mortgage Fiasco?
Managers from Freddie Mac and Fannie Mae testified before Congress on December 9, 2008, that pressure from HUD (U.S. Department of Housing and Urban Development) who governed them had forced them to accept the high-risk, sub-prime, zero down-payment mortgages. This crisis was not caused by "greed and corruption on Wall street." It was caused by stupid, corrupt politicians in Washington, DC, and their governmental departments (HUD). The primary goal at HUD was that every sluggard should have a house like hard working people.
Speaker of the House, Newt Gingrich, received six-figure campaign contributions from Freddie Mac and Fannie Mae, but Democrats, including president-elect Barack Obama and Senate Banking Committee Chairman Christopher Dodd, received more money in campaign contributions from Fannie Mae and Freddie Mac than any other members of Congress.
AP Blames GOP For Freddie Mac Fiasco, Ignores Obama Donations.
Guilty Couple No. 3 - Robert Dole (Republican) was elected Senate Majority Leader, and Trent Lott (Republican) was elected Senate Majority Whip in 1995, where they presided over the approval of the Freddie Mac and Fanny Mae mortgage relaxation bill. Trent Lott was elected Senate Majority Leader in 1996. Their positions gave them and the Republican party the power to block the dangerous plan sponsored by President Bill Clinton. The Republicans could have simply ignored it. Instead, Robert Dole and Trent Lott gave their full support for the relaxation of home mortgage requirements which has resulted in our present financial crisis.
Senator Trent Lott was one of only 19 senators who also voted in 2006 to lift restrictions on stem cell research, thereby allowing federal funding of research based on the killing of human embryos, an absolutely disgusting act reminiscent of those of Adolph Hitler. He smiles and talks like a "good ole boy" from Mississippi who wouldn't swat a fly, but in reality he is very evil.
Guilty Party No. 4 - Alan Greenspan as the Chairman of the Federal Reserve began to reduce the Federal Funds interest rates in February, 2002, until they reach a record low of only 1% in July, 2003. This ridiculously low interest rate was a redistribution of wealth by stealing interest from responsible people with savings accounts to irresponsible home buyers (sluggards) with no down payment and an adjustable rate mortgage (ARM) based on the short-term interest rates. These ultra-low Fed funds rates caused the housing bubble. The action baited the default trap that was built by President Clinton and his wife, Hillary.
This course of action was a severe penalty to the retired senior citizens who counted on their fixed-rate income from savings to help provide for themselves. This move was a typical Marxist attempt to transfer money from responsible senior citizens to the irresponsible voting sluggards.
Chairman Greenspan began raising interest rates again in July, 2004. This action placed immediate pressure on the holders of adjustable-rate mortgages, as their monthly home-owners' mortgage payment surged with each increase. The sluggard began to feel the pain that the senior citizens had experienced previously. The irresponsible, lazy sluggard simply walked away from the house. Many would send the key to the bank instead of the monthly payment (hence the name jingle mail). Many common people joked about the foolishness of these financial actions taken by Greenspan, President Clinton and President George W. Bush. This is not Ph.D. economic rocket science. Their actions were discerned as nonsense by ordinary street people.
Chairman Greenspan had 200 Ph.D. financial and economic experts at his beck and call. Yet, he didn't see any risk in the sub-prime adjustable-rate mortgages. He even encouraged lenders to develop similar wild mortgage options in his statement before the press that was addressed to lenders, "Create a number of other mortgage options other than the 30-year fixed rate mortgage." Every honest, small business owner knows this was a recipe for disaster. The issuance of the home loans with no money down, no proof of income, no proof of a job, and interest-only payments that never pay off the principle were a common joke on radio, TV, and in conversation by the common people. Yet, Greenspan and his 200 Ph.D.s thought it was great. DUH . . . . . Greenspan should go down in history as the economic bubble maker. Alan Greenspan is a major player in the evil Jewish Oligarchy that controls America.
Jews Are an Evil People Who Have Been Cursed by Jesus Christ.
Chairman Greenspan ruled like the King of the Fourth Branch of Government, or King of the USA. Past presidents of the Greenspan Federal Reserve Banks are now criticizing him because of his domineering disregard for their opinions. Greenspan trumped President George W. Bush, the Senate, the House of Representatives, and those comrades of the past who had elevated Chairman Greenspan to this lofty, unconstitutional throne. Barney Frank, House Finance Committee Chairman, pretended to be in charge out of embarrassment lest he admit that Chairman Greenspan was truly the King of the USA. The US Supreme Court Justices hid in their temple not wanting to address the fact that creation of the Federal Reserve was in violation of the US Constitution and Bill of Rights. The Federal Reserve should not have been created without a change in the Constitution.
We have Representative Barney Frank guarding our financial system. Wow . . . What a joke. He approved all of the stupid moves that lead to our financial crisis of 2008. Representative Barney Frank is not listed as one of the major "Guilty Parties" because he is simply a "gopher."
Dr. David
Duke Exposes the Investment Bankers Who
Sold the World Toxic Sub-Prime Mortgage-Backed Securities
CNN Goldman Sachs & the Zionists' Matrix
Guilty Party No. 5 - President George W. Bush ran for office as a "pro-life" Republican. He won with a majority is both houses of government, but President Bush didn't use is endorsement to support and sign a bill to stop the killing of the unborn (abortion). No, no. He turned away from the citizens who elected him. Instead, President Bush began to undermine the Constitution of the United States of America. He directed illegal searches of American citizens and he promoted detailed governmental control of public economic activities. He was fully supported and actively promoted the ultra-low interest rate plunge that began in February, 2002 after the "dot-com bubble" popped. President Bush was also supportive of the previous decisions which allowed poor, inner-city blacks to buy homes they could not afford. President Bush worked closely with Fed Chairman Alan Greenspan to bait the default trap by enticing the sluggards to enter the trap by obtaining for a home mortgage they could not afford. President Bush said, "Too many minorities can't get a mortgage to buy their own home." He was in full support of the sub-prime, adjustable-rate mortgage (ARM) market where people were given big mortgages with no money down and no proof of income. These were jokingly called liar loans because the applicants and the loan salesmen were all liars. President Bush is a strong Marxist to the core as shown by his "free trade" and "open border" policies. President Bush was thrilled with the housing mania, hoping it would also elevate his ridiculously low public approval rating. It didn't. President George W. Bush has earned the nickname, "Bubble Bush."
Naturally, many irresponsible whites and illegal Mexicans jumped on the bandwagon to buy a new home without any down payment and without requiring them to show they had the ability to make the future payments. President Bush, the Marxist, was proud that Mexican peasants from their hut in the Yucatan Peninsula traveled to the US where they could buy a home in the suburbs with no money down and no job. The only thing they had to do to become a full-fledged US citizen was to purchase a forged birth certificate like Senator Obama's mother did for her little half-white boy born in Nigeria. These home buyers were allowed to take on massive debts via a home mortgage, credit cards, auto loans, business loans, etc. President Bush made extensive efforts to encourage consumers to take on even more debt in his selfish effort to make the economy soar and to improve his dismal approval ratings. It didn't work. Both have crashed. President "Bubble" Bush and his Treasury Secretary made no effort to stop Freddie Mae and Fannie Mac from mixing the subprime, high-risk, adjustable-rate mortgages with low-risk, fixed-rate, 30-year mortgages in packages for resale to financial institutions and banks through the USA and worldwide.
President George W. Bush may have realized his mistake by 2006, but it was too late. Actually, I doubt that he even has a clue what his mistakes were to this day. He took no action to avoid the coming financial crisis. He provided no leadership. In his second term he was straddled with Democrats in control of both the Senate and House of Representatives. Democrats like Senators Hillary Clinton, Ted Kennedy, Chris Dodd, Charles Schumer, Barack Obama, and Representative Barney Frank blocked any feeble attempt of the Bush Administration to change the mortgage loan requirements. These Democrats kept Franklin Raines in charge at Fanny Mae, and he in turn contributed large sums of money to their re-election campaigns. Has anyone in the judicial side of government ever considered these actions to be treason. Well no, but they obviously are.
George W. Bush is perhaps the most hated President in the United States. The Democrats naturally hated him because he claimed to be a true conservative, but many Republicans came to hate him because he proved to be a fake conservative, fake Christian, and a hardcore Marxist. His numerous major mistakes and inactions have caused a total takeover of the United States by Marxist-Fascist, liberal Democrats. Bush congratulated Obama on his "awesome victory." SICK . . .
President George W. Bush always ducks his
mistakes.
President Richard Nixon will forever be quoted for his backwards self-assessment, "I am not a crook." Nixon made the statement only because his crookedness had been exposed. President George W. Bush presented a similar summation of his administration in his last news conference on January 14, 2009. Bush whined and dodged, while blaming everyone else in the world for our financial crash of 2008. The summation of his new conference, like Nixon, would have been perfectly backwards if he had said, "I am not a dummy!" Well, Bush is a dummy, and Nixon was a crook. They were both Marxists - Fascists. Nixon imposed wage and price controls. Bush turned the entire United States economy over to the corruption on Wall Street and Federalized the banking system. The economic growth during Bush's mid-years was created on massive debt of the sluggards with their home mortgages and credit cards, investment bankers by their free reign of greed, and hedge funds in their corruption and lies. It is shocking that the Republican Party keeps nominating corrupt and dumb Marxists - Fascists. The only thing worse is the Democrat Party that continues to nominate evil Marxists - Communists. These people have one thing in common. They all lack the indwelling Holy Spirit and are destined to spend eternity in Hell.
Guilty Party No. 6 - Benjamin Shalom Bernanke succeeded Alan Greenspan as Chairman of the Federal Reserve on February 1, 2006. Bernanke continued to raise interest rates, which reached a peak of 5.25% in July, 2006. Fed Chairman Bernanke shares the credit with Alan Greenspan for springing the default credit trap on the sluggard. Chairman Bernanke popped the Greenspan housing bubble. This sharp surge in interest rates squeezed the home buyers who held the subprime ARMs. Millions of these homeowners began walking away from their houses because they couldn't afford the higher interest rates. The mortgage companies dumped the houses on the market for sale when the buyers went into default. So other home owners had negative equity (commonly called under-water or upside-down) because of the drop in home prices. The value of the house was much less than the amount of the mortgage they owed on the house. This continued to depress house values even further. The drop in value for these houses has reached several trillion dollars. Banks holding the mortgages are essentially bankrupt. This action punished responsible homeowners, who saw the value of their homes plunge. Why do Federal Reserve chairmen consistently punish responsible savers and reward sluggards by lowering interest rates? Because they are EVIL. Benjamin Bernanke is a major player in the evil Jewish Oligarchy that controls America.
Jews Are an Evil People Who Have Been Cursed by Jesus Christ.
Who Really Rules America?
Mr. Bernanke said he would throw money from helicopters before allowing deflation. Excuse me, but we still had deflation even though he is throwing trillions of dollars into the system. Calling Mr. Bernanke "helicopter Ben" is an insult. The proper title should be "C-130 Ben" or "Bubble" Ben Bernanke.
Now Chairman Bernanke is creating a new bubble. Starting on March 18, 2009, "Bubble Ben" began buying back Federal Reserve 10-year notes with printed money at the rate of $30 billion per week. This is called monetizing the debt. Bubble Ben started the sharpest stock market rally in 37 years with commodities and bonds also rising. Here we go again. Another bubble. Ok, so the housing bubble was caused by 1% Fed Funds interest rates. Now "Ben Bubble" is building a new bubble by dropping the rate to zero plus throwing $30 billion per week into the markets. How will Ben Bubble end this action without the bubble popping? The year 2000 bubble popped. The year 2008 bubble popped. The Federal Reserve has lost control of the financial system.
Fed to buy $300 of Long-Term Treasuries - Bloomberg - March 18, 2009.
The entire world financial system, stocks, bonds, property, and commodities (including gold) have become completely socialized with Chairman Bernanke as the Czar. Free markets are gone. Those with inside information get rich while the average man looses his shirt in the gyrations. Why study economics? Why evaluate sales and earnings potentials? Why work, save, and invest? It is all vanity or vapor as King Solomon claimed in the Book of Ecclesiastes.
Remember, in 2006, when "no money down", sub-prime, adjustable-rate mortgages were the hottest bubble, Chairman Bernanke jacked up the rates from 1% to 5.25% which popped the housing bubble? Now the "Fed Funds" interest rate is zero, and he is printing money by the hundreds of billions of dollars and spreading around trillions to his favorite banks as "loans" trying to stop the bubble collapse. Does anyone really think his next bubble won't be worse than the last two.
See below why this actions have turned China into a slave nation, and China is furious.
Fed Chairman Alan Greenspan built the "dot-com" bubble and then popped it. Ben Bernanke is doing the same thing as of May, 2009. He is building a stock market bubble, a commodities bubble, and a treasury bond bubble. Surely he will pop all of these latest bubbles just like he popped the housing bubble in 2006.
Fed Chairman Ben Bernanke solidified the United States of America as entrenched in Marxism and Fascism. He was the master-mind behind the governments complete or partial take-over of formerly capitalist companies including:
General Motors Corporation
GMAC Financial Services
Chrysler Corporation
Fanny Mae
Freddie Mack
Bank of America
Citigroup
American Insurance Group
Goldman Sachs Group
JPMorgan Chase
Morgan Stanley
Dozens of other banks
Guilty Parties No. 7 - Sluggards appeared by the millions between 1999 and 2005, thinking they could purchase a house with no money down and no risk. Other sluggards who had purchased a house a few years earlier realized they could pull all of the accumulated equity out of their house by re-mortgaging over and over. The sluggards squandered their home equity on fun and luxuries. The common joke describe this action as "eating your house." They falsely thought they could simply walk away without penalty. The sluggard always does the wrong thing. The purchases were wrong, and walking away was wrong. Now the millions of sluggards have ruined their credit rating. They will not be able to purchase another home because of their poor credit ratings. In a few more years, those who have walked away from a $300,000 home will gasp when they see the same house selling for $600,000. The government's massive infusion of money into the economy will eventually result in raging inflation after the present deflation has subsided. Sluggards are always wrong. These people are not the victims as claimed by Marxists.
Single moms should not be given credit cards, auto loans, student loans, or home mortgages. They should be told to stop whoring around and get married.
Who are the victims?
The United States Federal Reserve, President, Congress, and investment bankers all sought their own self interest by loading the hourly worker and single moms with enormous debt. It was a dumb, selfish move by the leaders, because the hourly workers and single moms collapsed under the debt load. Everyone lost because the initial policies were stupid.
Many normal banks and investment banks were asleep at the helm. They purchased mortgage-backed securities from Freddie Mac and Fannie Mae even though they contained the toxic, subprime mortgages. These banks were "sucker punched" by the government. It was a setup that most ordinary street people saw coming, but many bank managers were too busy dining at the club. The fact that these banking experts were caught flat-footed is shocking. Many of the worst banks have been closed, and many more will be closed. They should be closed, and these dumb managers should become unemployed. Merrill Lynch and Company had a "Vice-president of Risk Management." He was a dummy. Merrill Lynch went to zero.
The responsible savers are the biggest victims. They had the interest from their savings accounts stolen from them by President George W. Bush and Fed Chairmen, Alan Greenspan and Benjamin Shalom Bernanke. The responsible saver saw the value of his home deflated by the sluggard who lived next door. The responsible citizens are the victims.
Worldwide Financial Crisis of 2008 - 2009 and the Titanic
The 2008 - 2009 worldwide economic crisis is a magnification of the sinking of the Titanic. The US administration under Presidents George Bush and Barack Obama have both developed a strategy of "saving the financial organization that are too big to fail." Little banks and other businesses simply go under. The captain on the maiden voyage of the new, 1912, luxury, Atlantic steamship, Titanic, had a similar strategy of "saving those passengers who were too rich to drown." He placed the rich passengers in boats and pushed them off, even though the boats were only partially filled with people. He instructed the crew to lock the hard-working service staff in their quarters below deck. The "service staff were too poor to save." The captain's actions of mass murder were truthfully and clearly depicted in the movie, Titanic (1997).
How to STOP housing mortgage defaults in 15 minutes.
February 22, 2009.
Dear President Obama,
The current housing mortgage default crisis could be stopped in 15 minutes. I will lay out a few simple concepts below. I am not writing more because I expect this mail to be simply diverted to the trash by the White House staff.
1. President Obama, you should have a 15-minute TV address to the American people about the housing mortgage default crisis.
2. Tell the people that those who have defaulted on their mortgages have made a grave mistake because in a few short years the return of inflation could easily make a $300,000 home increase in value to $600,000. They will never qualify for a home mortgage again in their lifetime, and they most likely could not afford the home at the future higher prices. This shocking truth will convince many home owners that they should not walk away from their homes as many of their neighbors have.
3. Tell those people who are under water on their homes (owe more on the mortgage than the present market price) to sit tight. They should be encouraged to do everything possible to continue paying the mortgage payments because that home could be selling for millions of dollars by the time the mortgage has been fulfilled.
4. Immediately sign an "executive order" forbidding all mortgage lenders from "calling in" loans on homes where the homeowner has positive equity. This nasty practice is an attack on the homeowner to grab liquidity out of a home while the owner suffers the equity loss from the "fire sale" of the home. The government should interfere between the mortgage company and the home buyer to stop these types of foreclosures because of the extreme economic conditions.
5. Immediately sign an "executive order" requiring mortgage lenders and those who cannot afford the monthly payment because they lost their job, or whatever, to agree to the following plan:
5A. Mortgage lenders should allow all payments, including interest, principal, insurance, and taxes to be added to the mortgage loan balance. Therefore, the loan value would be increasing. As housing prices stabilized and rise again in the future, the value of the home would become equal to the mortgage balance at some time. No one will have lost any money. The home should have an independent inspection at the start of this program, and the homeowner is expected to care for the home. When the home is sold in future years, another independent inspection would be done. Excess damages would be subtracted from the homeowner's part of the excess equity, if any. Some normal aging and wear would be exempt so as to prevent the lender from gouging the borrower.
5B. Homeowners could certainly pay toward the loan in any way they desires so as to increase their portion of the equity. The homeowner could make partial payment as their ability to pay returned. The mortgage lender would not have to monitor or harass the homeowner if a payment were missed. The deficient amount would simply be added to the mortgage loan balance.
6. Benefits of this plan:
6A. Nearly all homeowners would STOP abandoning their homes. Why should they leave under this plan? There is no reason.
6B. Nearly all of the mortgage lenders would STOP foreclosure proceedings on homeowners who have delinquent payments. Why should they under this plan? In the past, the value of homes has increased faster than the amount of the loan payment. Sitting tight on the loan will result in a full recovery of the loan plus the interest long before the term of the loan arrives.
6C. The plunge in housing values would stop, and the crisis would simply evaporate. The housing deflation spiral would be reversed.
6D. The stock market would soar, thereby returning the lost capital to investors at no cost to the US government. The effect would be worldwide, so this plan could also be employed in other countries who would see the instant benefits.
6E. This plan would not require any government spending whatsoever.
6F. This plan would not punish responsible homeowners who have equity in their homes.
6G. This plan would not reward those irresponsible people who have already walked away from their homes. Rewarding irresponsible home buyers is harshly criticized by responsible buyers.
6H. This plan would benefit everyone, lender and borrower. It would be fair to everyone no matter the status of their home ownership.
Only 15 minutes of TV air time during prime time is required. The plan should be kept secret until delivery, but the speech should be hyped beforehand in order to get everyone's attention. The general topic would be revealed two days in advance without revealing details of the plan.
Sincerely,
Kent R. Rieske
Boulder, CO 80301~~~~~~~~~~~~~~~~~~~
My additional comments that were not included in the letter to President Obama:
The sluggard (those stupid people who bought a home at the market top with no money down) has proven how stupid he really is by walking way from his home simply because the estimated value is less than his mortgage. This dummy doesn't realize that he has lost no money. He has no equity in the home to loose. The mortgage lender actually owns his home, not the sluggard. The mortgage company has a "paper loss" which becomes a realized loss when sold after default. It doesn't matter if the value of a home goes down or up over the years if the home buyer continues living in the home and paying off the mortgage over 30 years.
What should the USA do now?
