NN10 Liveblog: The Forgotten Foreclosure Crisis
Right off, let me say what an honor it is to grace the page that is regularly David’s home. Dave will be up on stage today, so I will be playing the roll of willing, dutiful scribe. Now let’s get to the matter at hand.
In 2008 and 2009, nearly two million American families lost their homes and Americans are currently entering the foreclosure process at a rate of almost 50,000 per week. Even as the crisis continues to wreak havoc in communities across the country, there has yet to be any effective action underway to slow the rate of foreclosures. The panelists will discuss what went wrong in the fight for bankruptcy modification in 2008 and what steps must be taken to prevent a future housing crisis. They’ll also discuss the role of the netroots in the upcoming congressional battle to enact housing reform and how they can effectively pressure members to take action.
Panelists: Sen. Jeff Merkley, Elizabeth Warren, David Dayen, Ryan Grim
Folks are just filtering in to the room, all four participants are now on stage exchanging greetings. . . .
Ryan Grim will be making the introductions.
Ryan tells the story of talking to Las Vegas camera operator the otherday. . . he is working man who had put $100,000 down on a house three years ago, and he has lost it all. He is not sure where he will be living soon. The upside–landlords in LV no longer check shortselling and foreclosure when they do a credit check. . . if they did, they would have no tenants.
This man has been told to walk away from his house, but he cannot do it. But he will eventually have to.
Ryan called David one of the best reporters on Capitol Hill–even though he lives in LA.
Sen Merkley is up first:
Not only is Elizabeth warren the founder creator mother of the Consumer Protection Agency, she is a potential nominee and I really hope Pres. Obama appoints her. [applause]
We need a hammer to allow the HAMP process to work better, but we are getting incredible resistence.
Ryan asks: Gene Sperling (sp?) the under sec responsible for enforcing HAMP–should he be fired?
Sen. Merkley declines to jump in, but says that a number of senators are poised to carry on. . .
Dave Dayen–I don’t mind jumping in: Gene Sperling should be fired.
Dave reads a quote bout the inadequacies of HAMP–it came from Warren.
HAMP is hurting liberalism. We need to get over this mindset of the worst words you can hear are “I’m form the government, I’m here to help.” HAMP is predatory lending, and it is a crisis in liberalism.
(My apologies, my net connection is really slow today–having ling delays uploading content)
Elizabeth Warren: There is a promise that we are here to help, but it is a process of filling out forms, and at the end of the day, nothign happens and no one is helped.
For decades we believed in our government (and this program is destroying that faith)
Franklin Roosevelt made it safe to do two things: put your money in banks. . . and (argh, i lost thing number two in the crowd noise!)
Ronald Reagan’s quote in the 80s (as noted by DD above) is soooo harmful. People don’t think they need or trust the things the gov’t. delivers.
HAMP–in the things that people taste touch feel–has let people down.
Lending works in general–the agreement about borrowing and paying back–but in the background is bankruptcy. B’ruptcy is in the Constitution. One of the few financial points in there.
B’ruptcy is an American principle. The lender takes the risk & can reqap the reward, but at the end of the day, we can also say: you tried your best, it is OK.
For every small business in America, B’ruptcy is in the background. It is what makes it possible to form new biz. You give it a shot, you succeeed or fail, but if you fall you can get up again and roll the dice again. Capital formation is what makes our system stronger.
Biz iz given the option of staying in the premises, restructuring, paying debt, build a new biz. Individuals in every other way (with the partial exception of cars) can do the same–EXCEPT with their homes.
THIS IS THE EXCEPTION THAT IS STRANGLING US.
You can’t do housing starts in an economy where value continues to decline. Warren describes an economiuc cascade.
Dave says at the risk of seeming too controversial, I want to agree with everything Warren just said.
Warren: B’ruptcy acknowledges that things happen to cause a snowballing of debt. The risk is why we allow banks/cred cards to charge interest.
Sen Merkley: Student loans are also not dismissable now in B’ruptcy.
DD: Home lock: you might get stuck in a place where the econ is bad, but you can’t move because you are in a home that is underwater.
Dave has spoken to candidates that have to campaign in neighborhoods where only one home per block is occupied.
DD sites Bill Clinton “work hard, play by the rules” quote, and says you cannot assume that this will hold anymore.
Ryan asks if there is a concern that govt will drift to the side of the lenders.
Merkley responds: My hope is that a few of the things we have done are on the side of the families. Goes to a vision of what you want America to look like. WHen I came out of college, this was a safer place. Mortgages, credit were secure agreements–but then they were deregulated. SO now a few people make a lot of money, while families suffer losses.
RG: are there other countries with models that work?
E Warren: We all understood bubbles–we chase markets up. You can do the same thing on the downside. You can shoot above or below in supply and demand–the risk is that we drive the market down down down. One approach tat has been used in other coutnries is you say “this is it” You let the markets drift down for six months, then you say stop. You rewrite the mortgages. Everyone takes some loss.
EW praises the FinReg signed into law. Not perfect, but gives us tools.
You know who my favorite friends in this fight are right now? The real estate agents.
They are not getting the profit & turnover. 1 in every 3 home sales in 1Q 2010 is a foreclosure.
Merkley: let’s enact a program to extend a bridge for families to get through this; my colleagues across the aisle want to extend the Bush tax cuts. That will not help the economy.
Merkley wants to send a message to GOP on tax cuts: absolutely not.
DD: Trying to turn people’s homes into debtors prisons is so ridiculous.
Commercial property has an out–why not homes?
A question/comment: If we had loan modification, then we might not have to have so many bankruptcies.
EW: The best part of b’ruptcy is not b’ruptcy–it is the motivation to sit down and negotiate debt to a fare market value.
Q: I looked at the 2005 b/r changes, and I can’t understand how derivatives are handled.
EW: you were not supposed to understand how they handled derivatives. [big laugh]
look at the progression of the law, and you will see this tiny tear in the fabric, this tiny provision without any sponsors that somehow made it into the law that deals with financial products–which no one paid attention to until Lehman.
Everyone understands the tools in the fianancial industry, and they know how to use them to their advantage–and general consumers pay.
Q: HAMP is like throwing you in the river w/ cememnt shoes–but giving you a breathing straw.
DD: We have to make this a political issue–I hope you will support hearing (to Merkley) when you get back to DC. [the Senator nods]
Q: Renter proections? There is nothing in the law right now that forces a lender to negotiate with a defaulting owner conversion to fairmarket rent. [questioner also points out how hard this crisis hits the Af-Am middle class.]
EW: How this crisis hits the Af-Am middle class is a great untold story.
The first wave of variable rate loans were not marketed to hep people keep homes–they were done to help people lose homes. & if you look who were sold these bait & switch refi mortgages, you will see they are predominantly in communities of color.
Even if you stopped all this today, you will still have a crisis that lasts a generation.
It is impossibel to get ahead of this, but we need to get on top of this.
[warren is really emotional here–passionate, almost on verge of tears, maybe?]
DD: HEY–enjoy netroots nation! [laughter]
DD: What is more American than starting over? THe assualt on strategic default is the govt telling you you are not a good person.
EW: The gov’t set aside moeny for this crisis–until now, we have spent less than 1/2 of 1% of it. We have the money to help, we have money for options, if we try.
Sen Merkley: We need lifeline b’ruptcy provisions. Like exploring right of first refusal on foreclosre home sales (like a farm program from the past)
Merkley said he was going to vote against 2nd half of TARP funds unless he was given assurances to $ set aisde for lifeline banruptcy. One hour before vote, he got a letter from president promising $75 billion for this. . . and? (as we say in the ‘sphere: crickets)
EW: urges folks to support folks like Merkley.
… and we are done!
Closing comments: I can’t wait to hear the sotry of how David lost his voice. . . AND As compelling as Elizabeth Warren is on TV, I gotta say it goes triple for her in person.