It is true that the economic well-being of our nation is in jeopardy and that consumer confidence and liquidity is badly needed in order to have any hope of reversing this downward economic slide. The Emergency Economic Recovery Act of 2008 directly and meaningfully addresses financial liquidity but fails to seriously address the core problem underlying the current financial crisis: massive home foreclosures.
It is therefore equally true that the congressional focus on bailing out Wall Street cannot be separated from efforts to stop foreclosures. I say this not only because it is the right and fair thing to do, but also because the bailout won’t work without it.
Last week, the leadership of the National Community Reinvestment Coalition (NCRC) met with Federal Reserve Board Chairman Ben Bernanke and he made it clear that another two million foreclosures were imminent. Treasury Secretary Henry Paulson has said he expects we’ll see 2.5 million foreclosures this year. These figures show a dramatic acceleration of the foreclosure rates we have seen over the past few years.
If the foreclosures of these past four years can drive the U.S. economy to the brink of a depression, what can we expect from a dramatic increase in those numbers?
Congressional leaders need to act quickly to make sure that the financial rescue package being debated in Congress moves from being a bailout for financial institutions, to a true economic recovery plan that first and foremost assists working families to stay in their homes.
Congressional leaders need to understand that when community groups oppose this bailout, it doesn’t mean they don’t understand the problem. In fact, understanding the problem is the best reason not to support this bill. As written, this bill will not work.
No wonder Congress currently has a lower approval rating than President Bush. Hard to do, but they have earned it. Few congressional leaders have shown the leadership necessary to protect working Americans. Elected and appointed officials long ignored the warnings from NCRC and our members who urged them to clamp down on high cost, unsafe and unsound loans. As far back as 2002 and consistently since then we warned that these loans were unfair and would cause problems for homeowners. To this day, they have still not outlawed the lending practices that got us here in the first place.
And now, after years of what Alan Greenspan described as “infectious greed and malfeasance,” we find America facing a deep and dark economic precipice into which we are rapidly sliding.
The government has backed itself into this position through deregulation, non-enforcement of consumer protections and its inaction against a lending and securitization industry gone wild. And now we have little choice but to shore up the economy, but we must do so by focusing in on one very fundamental reason for our economic decline: home foreclosures. Any bailout of Wall Street must be accompanied by meaningful, comprehensive and rapid loan modifications in order to halt the massive numbers of home foreclosures occurring at the rate of over 300,000 foreclosure filings per month.
If meaningful foreclosure mitigation is not in the congressional bailout proposal, then we owe it to all Americans to oppose that legislation. The millions of families who have already lost, and the millions more that will lose their homes due primarily to malfeasant lending practices and Wall Street greed, are depending upon us to do the right thing.
“It is about foreclosures, stupid.” I said this over a year ago and it is as true now as it was then. Stop the foreclosures, save the economy.