The banking lobby still holds enough sway inside the Beltway to torpedo sensible consumer protection rules, even after releasing a flood of predatory mortgages that kicked off the current economic crisis. On issues ranging from payday loans to subprime mortgages, the banking industry continues to successfully defend itself against new regulations that would protect the consumer. As if that weren't outrage enough, the finance lobby has also joined other corporate interest groups to fund misinformation campaigns that smear unions and block wage growth.
Yesterday, Nancy Pelosi announced that a housing bill which could come up for a vote this week would include the "cram-down" provision, which would allow bankruptcy judges to modify the terms of mortgages for borrowers on their primary residence (currently judges have the ability to do this on secondary residences). This is an important provision, which most economists believe will be the best tool homeowners can have for them to stay in their homes, and for lenders to agree to loan modifications. The banksters hate this idea, mainly because they know it would blow the whistle on their consistent violations of the spirit and the letter of the Truth In Lending Law, in their mania to lock as many people into mortgages as possible without regard for ability to pay, so they could sell those mortgages on as securities, and so on and so forth. This ultimately is the fault of the lender, who are clearly the irresponsible ones in the whole scenario.
Along with my friends at Brave New Films, I talked to Rep. John Conyers, the chair of the House Judiciary Committee and the author of HR 200, the cram-down bill, about this provision and why it's needed at this time.
As this is being written we are in the midst of the second day of testimony before Congress by Ben Bernanke and Henry Paulson in support of the Administration's proposed financial rescue package.
The basic sales pitch is that the Nation's financial problems are at this moment so severe that the only solution is to expose to risk $700 billion dollars of taxpayer money to buy assets with a currently unknown price...and to give the absolute and total power over what those valuations are, what should and should not be bought, what repayment terms will be sought-and additionally, what happens to any money recovered--to one man, Henry Paulson.
There are those who are not on board. They have critics, who continue to stress the dire consequences of inaction.
With all due respect to those critics...we have been down this road before with this Administration-and last time, they weren't so big on telling the truth...or getting the job done effectively.
We'll cover that ground, we'll talk a bit about "mark to market" issues-and on a positive note, we'll address the role of "warrants", the negotiating power of Warren Buffett, and how the taxpayer could actually see substantial recoveries of money down the road.
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