Holiday for the People

In this season of peace on earth and good will towards men, how about some forgiveness, like mortgage reductions for citizens? The banks were forgiven with no questions asked, yet citizens who paid to forgive receive no such mortgage debt forgiveness themselves.

Neither the banks nor the Obama administration are willing to reduce underwater mortgages as a solution to the housing crisis. “The government has been sheltering banks from facing the hard truth about their condition. They may be valuing mortgages or mortgage bonds at say, 85 cents on the dollar, when the true market value, industry experts say, is closer to 25 or 30 cents. …if many of the loans aren’t ever going to be repaid, then the assets now claimed by the bank are imaginary.”

Real people aren’t having imaginary difficulties being underwater. Modification of mortgages along with interest reduction would greatly boost the economy.

As housing prices continue to decrease, it increases the number of mortgages under water. This flood of bad debt has to be reduced or the economy will not recover.

The current financial system is such a wicked web of deceit and moral degeneration that modifying mortgages would mean “The banks would have to report reduced capital…” and “This could threaten the solvency of some of the very large banks-those that have exaggerated their financial condition, as many market analysts and shareholders suspect.”

Let’s have a bank holiday in this holiday season. As former banker Rob Johnson said, “These institutions are so intertwined they are a system. You can’t deal with one bank alone; you have to deal with the system. You call a month long bank holiday for the twenty largest banks, and that holds everything in place while the regulators mark down the assets and see how everybody’s losses will affect everyone else.

“Then you wipe out stockholders, wipe out management, possibly some of the unsecured debt. Mortgages would be refinanced based on real value. Once everybody has taken their hit and you’ve wiped out existing stockholders, then the government comes in and properly, transparently recapitalizes all of them. As these new institutions gain a footing, eventually they can be sold back to the private market.” “This is rough stuff, but the nation could get a fresh start and a new, more honest banking system out of the hard knocks.”

The people cannot be the victims three times here; once by the banks betting against itself with our houses and savings at risk; second by the government bailing out the banks with our tax dollars “no questions asked,” and now the third hit by the banks who are responsible for the whole mess to begin with, refusing to adjust the house value which they manipulated to be over priced in the first place.

Let’s face it, if America wants to be considered the ‘best’ country in the world, the country that all others strive to emulate, then it should start by being honest and truthful with it’s constituents. Otherwise, we become just like the other failed countries where its politicians and bankers have sucked the life out of it’s population, some of the very countries where we’ve sent our military might to depose those in power, to change it to where the government serves the people. The bankers and their politician minions at their beck and call have no reason to believe that it can’t happen here as well.

Note-All quotes are from the article in The Nation magazine-”Debt Jubilee, American Style” by William Greider.