Mark Winston Griffith
Foreclosure Moratorium: Its time has come?
This post is cross-posted on Huffington Post
There used to be time when the idea of a national moratorium on foreclosures was largely seen as an impractical if not radical idea. The conventional wisdom has generally been that it is a political non-starter: The government would never sanction it. The lenders would cry bloody murder. How could you so brazenly interrupt the free market like that?
Months ago DMI's own Andrea Batista Schlesinger wrote an op-ed proposing a moratorium, against the tide of the fair lending advocacy mainstream in New York State. ACORN's push to freeze foreclosures in New York State earlier this year seemed so extreme that it helped position the passage of a responsible lending and foreclosure prevention law - one of the most far reaching pieces of legislation of its kind in the country - as an act of responsible moderation.
What a difference an economic meltdown makes. It's no coincidence that the precedent for a foreclosure moratorium dates back to the Great Depression. Over the last few weeks, the idea of a foreclosure freeze has emerged from the political fringe to the center of public policy debates. Ljournalist Scott Sabatini has been reporting on a moratorium "movement" in California that has resulted in the Greenlining Institute lobbying Sheila Bair and Congress for a national freeze. Sheila Bair and the FDIC had already employed a foreclosure freeze when they put in motion the takeover and mortgage modification blitz of IndyMac. And just yesterday Freddie and Fannie Mae announced that they would suspend foreclosures of occupied homes through the holiday season.
Is this a gimmick or an effective foreclosure prevention strategy? The answer of course depends on what happens during the freeze period. If homeowners are provided with real opportunities to make their mortgages permanently affordable, then it is a victory for those of us who believe need to push the do-over button and re-set the clock on a generation of abusive loans.
If on the other and, homeowners are only given temporary payment plans that will eventually return to the loans unaffordability, then it can be a cynical and cruel maneuver that will only serve to prolong the financial crisis.
Mark Winston Griffith: Author Bio | Other Posts
Posted at 12:20 PM, Nov 21, 2008 in Economy
Permalink | Email to Friend | Comments (1)
Comments
It just never ceases to amaze me how commentators fail to make reasonable extrapolation of the glaring reality present circumstances reveal. The question is no longer "how" we got to this point, but rather "why." When you realize the answer centers on the mortgage bubble being a last-ditch effort to keep afloat the securities-based financial component of the infrastructure sustaining globalization ... and when you consider how this arrangement has been destroying the wealth-creating capacity of both individuals and entire economies ... then there's only one reasonable conclusion to make (and this is as evident now as it was 10 years ago).
To wit, the global financial system and its grotesquely imbalanced, derivatives-based infrastructure is HOPELESSLY BANKRUPT. Get that through your thick skulls people. There is no saving it. There is no bailing it out. Any scheme attempting to work within confines assuming the arrangement is anything but bankrupt is doomed to fail. Read that again. Doomed to fail.
You must be producing real wealth more prolifically than financial claims against it are being piled on. Trouble is, ever since the breakdown of the Bretton Woods system in the late 1960s and early 1970s, precisely the opposite has been the status quo. Scheme upon scheme has been built up to keep it going. And now it has reached a critical point. Either people are driven into the ground (at the risk of precipitating a social explosion) or a thorough bankruptcy reorganization re-instituting policies whose last well-known advocate was FDR are courageously pursued.
Are you calling the "political fringe," groups who advocate for American System principles the likes of FDR well understood? Shame on you. What country are you from? Do you know even a thing about this nation's historic struggle against tyranny, particularly its financial component? Because it is precisely this which has brought us to the present moment.
No monetarist monkey scheme -- no matter how well-intended -- will work now. It's finished. Moratorium is only the first step. A bankruptcy reorganization of the entire global financial arrangement is inevitable. And there is absolutely no need for "sacrifice." So, the likes of Pete Peterson and David Walker can take a hike to London for all any sane American cares. This breakdown crisis (which the growing foreclosure problem is but a symptom) has been coming on for years. So, deal with it. And stop pretending some minor adjustment will do the trick and get us back on track. It won't. It's finished...
Posted by: Tom Chechatka | November 21, 2008 10:36 PM