Insane Policy: Washington Post Promotes Bankruptcy To Avoid Foreclosure; Lets the Nation's Banks Go Under
November 20, 2007 (LPAC)--The Washington Post today strongly promotes Congressional legislation to let some households threatened with foreclosure, chose bankruptcy instead, getting their mortgages restructured by bankruptcy judges. This legislation is sponsored by Senators Charles Schumer and Dick Durbin, and Representatives Brad Miller of North Carolina and Linda Sanchez of California.
This action would simply ignore the crisis hitting America's chartered banks, and Congress' responsibility for protection of those depository banks from the massive losses of the mortgage meltdown. "If your state or local bank goes, you're gone, mortgage or not," commented Lyndon LaRouche, whose Homeowners and Bank Protection Act would save both homeowners from millions of foreclosures and chartered banks from closing their doors.
Under changes contained in the Miller-Sanchez bill, bankruptcy judges could lower the interest rate on a primary home, extend the life of the loan, or forgive part of the homeowner's debt. Further, the judge could reduce the principal on the loan to the home's "fair market value," which in the current depressed real estate market is generally less than the amount for which the mortgage-loan was contracted. The Washington Post, citing a report on Moody's Economy.com, projects that this could reduce by a quarter, the anticipated 2 million foreclosures in the next 18 months.
The Post demurely notes that "Lenders say investors pumped money into the mortgage market knowing each loan they funded was secured by an asset--the home." The paper doesn't mention the bubble of securities backed by these assets, held by the major investment banks. Nowhere is there any indication that the bill would do anything to keep necessary banks afloat.
And by the way, what of the OTHER 1.5 million homeowners which the proposed legislation apparently won't help?
Congress must stop being cowards amongst this crisis; bring in LaRouche directly and let him steer the country out of this catastrphe. If LaRouche is not brought in with his policy, the U.S. and the whole world will fall into a “new dark age.”