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Edited on Wed Oct-01-08 04:10 AM by Waiting For Everyman
That's my reaction to several tv comments I've heard that "this could be the end of the private banking system", if we don't bail them out.
So? :shrug:
Put a national bank in place alongside the private ones, and let them stand or fall as they may. Those on the righthand side of the spectrum who hate the Federal Reserve (justifiably) might even be willing to join us in that effort.
I see no big advantage in having a Federal Reserve, or in jacking up interest rates with private profit for middlemen - especially when that profit is nowhere in the realm of justifiable. THEY are the risk, not our homeowners. I'd start with a Home Owners' Loan Corp. as Kucinich, Hillary Clinton, and many noteworthy economists suggest, refinacing mortgages out of this problem and bundling them for sale in UNTRANCHED pools... tranching and derivatives ARE the problem.
Refinancing them out would give banks "relief" the right way, and there is no other way to modify mortgages. It can't be done any other way except by refinancing them - which the banks refuse to do. No matter what lawmakers say, or what they believe, or expect from their talks with bankers, "modifying" mortgages in a tranched pool can NOT be done. The bankers (including Paulson and Bernanke) are lying to them about modifying mortgages to give homeowners relief. It won't happen. It can't. It's nothing but empty wishful thinking on Congress' part, believing that from the bankers. It's a lie. There is no other way out of this foreclosure crisis. And the longer it continues, the WORSE it will get - 10,000 foreclosures per day. The banks have homeowners locked into these unpayable mortgages, and they want it that way, and they can't be changed except by refinancing them. That's the truth which no one is saying, and very few know.
But none of these banks have been doing refinances for months now, and they won't start unless it's again at SKY HIGH RATES (and tranched once again!). What in the heck does that solve? Homeowners already have predatory loans, what do we need with more of the same?
We NEED a New Deal style mortgage program. It needs to be @2% over the cost of money, and there's no reason it shouldn't be, if the government is backing them and if we aren't paying private middlement to play "risk games". "Risk" by their definition isn't the point anymore. Risk has already happened and we're beyond risk already, into crisis - the point is stopping the crisis. Refinances can be done in an orderly way by the government without unreasonable defaults, as it always used to be. (Then we would know what we're buying, and we'd have the collateral. Under these other bailouts, we have zero collateral because we won't get the mortgages notes.) This is not the time to overcharge people who are overcharged already, and the bankers have no intention of doing anything but that.
I'm not a banker, but I was a real estate agent back when banking was done with some common sense, so I may not know everything but I do know something about this, and what a lending system that worked was like. Also I know the banks aren't doing refinances b/c I've been looking for one since Spring. A very few are happening but nowhere near normal levels and nowhere near enough to stop this crisis - and nobody in the industry expects the non-lending to change no matter what law is passed.
These banks will have to be ordered to do refinances in this law or some other one, and at reasonable rates, or it won't happen! I guarantee they won't do it voluntarily at reasonable rates, they'll scream "risk" and jack them up to cover more of their looting - AGAIN. Otherwise just as it is now, they'll continue sitting on all the liquidity they get, it will not go where it needs to go, the right way.
I say the hell with them, it's time to have a National Bank of the United States. And I think we'd have some allies on the other side for that. This is an opportunity to get that friggin' albatross off our backs once and for all. "Smaller government" should begin by cutting ALL subsidies for private banks... including letting the Federal Reserve control our money supply.
Our currency is already effectively backed by our mortgages as it is now anyway - that's not what I say, that's what the macro-level industry says. We'd damn well better protect them then, and quickly. And our economy is 40% dependent on real estate. This isn't optional, it's a must.
The banks have been intentionally killing our economy and our homeowners and other borrowers just to feed their infinite greed, and even in the face of this disaster they have no intention of changing that - just as their Repub proponents have no intention of changing their tune either. If we expect anything but more of what they've already done, we're beyond stupid. They will never participate in being part of the solution. They ARE the problem.
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