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How housing bill helps banks, not taxpayers
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| Parent(s) |
Issue
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| Contributor | Patrick |
| Last Edited | Patrick Sep 15, 2008 12:19pm |
| Logged |
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| Category | Opinion |
| Media | Newspaper - San Francisco Chronicle |
| News Date | Sunday, September 14, 2008 06:00:00 PM UTC0:0 |
| Description | This is the complicated story of how Congress' recent $300 billion housing bill is a theft of taxpayer money.
To understand how it works, you must first put yourself in the shoes of Bank of America, Countrywide Financial, or any of the many U.S. banks facing big losses on delinquent mortgages. If you are a bank, you probably make loans to people to buy homes. You give the borrower money, and the borrower gives you a signed promise to repay - a mortgage - which is secured by the house.
Over the past five years, you got to sell a lot of your mortgages to Wall Street banks that then sold them to international investors. Wall Street paid you well for those mortgages. Because you didn't think you'd get stuck with them on your books, you started loaning anything to anyone.
But as the housing market's parabolic ascent stalled, you got stuck with a lot of mortgages you hadn't yet sold to Wall Street banks. And some Wall Street banks and investors may have forced you to buy back other mortgages, sticking you with hundreds of billions in bad debt. You also know that some of the mortgages that were sold to investors are packed with lies about the appraised value, the borrower's income and other information that may allow investors to force you to buy them back after foreclosure. |
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