Comments on: Why the Bankruptcy Change is Important

By: masaccio

masaccio — Fri, 26 Sep 2008 19:50:43 +0000

I agree that it may not be the bottom. From the standpoint of an owner, however, the question is whether they can make the payments. If they can, they have a house and a hope of equity in the future. If they can’t, they should just let the property foreclose and move now.

By: MsAnnaNOLA

MsAnnaNOLA — Fri, 26 Sep 2008 18:47:32 +0000

Buyer Beware:

This may work just fine in markets that have already seen the bottom. However in the most bubbly markets this is just setting folks up for failure because the markets take a long time to go back to equilibrium. They could still end up owing much more than the house it worth which also makes them much more likely to default a second time.

A second wave of defaults will impact the paper that the Treasury is proposing that we buy.

By: klynn

klynn — Fri, 26 Sep 2008 17:31:25 +0000

Hey masaccio,

I think a policy point list for people to fax or call in might be helpful right now. My credit union just issued a statement that our funds are safe and insured.

There are “runs” starting to happen at banks… The banks are having to put out PR statements to calm fears.

By: klynn

klynn — Fri, 26 Sep 2008 17:07:15 +0000

There is tremendous pushback from the lending industry over this, and for some reason the dems don’t have the spine to tell industry lobbyists to sit down and shut up. I would. The anger in the country is great enough to overwhelm the foolish industry that caused the problem.

(my bold)

All the more reason for the netroots to get involved and give them some spine.

We, the netroots, will not be able to criticize the Dems about a lack of spine ever again if we do not mobilize a policy and get it out there.

Thanks for answering my questions. Thanks for taking the time on such important issues.

By: masaccio

masaccio — Fri, 26 Sep 2008 16:41:15 +0000

I don’t know why he doesn’t like the plan, particularly because Dick Durbin is pushing it. I know the industry hates it, which may make it impossible to pass, but I don’t understand why anyone cares about the industry either. So, who knows?

By: Arbusto

Arbusto — Fri, 26 Sep 2008 15:14:29 +0000

Obama doesn’t want bankruptcy reform added to the bailout! Is this because he’ll think about it if he’s elected, some time during his rein, because it’s too complicated, or because it’s show that Biden, who thought the change in bankruptcy was the best thing since sliced bread or is it because Obama is a closet DLCer?

By: masaccio

masaccio — Fri, 26 Sep 2008 15:13:25 +0000

I’ve asked myself that question. I think it must be that people think this problem is so complicated that only experts can offer solutions. Of course there are problems only solvable by experts, like epidemics or flood protection. It may be that in broad outline this problem is one of those. That probably makes most of the leaders of the netroots reluctant to get involved.

But, the bankruptcy answer is one of the solutions offered by experts. I know some of the people who are working for it, and they are smart and connected. There is tremendous pushback from the lending industry over this, and for some reason the dems don’t have the spine to tell industry lobbyists to sit down and shut up. I would. The anger in the country is great enough to overwhelm the foolish industry that caused the problem.

By: Ishmael

Ishmael — Fri, 26 Sep 2008 13:53:25 +0000

Whether it has anything to do with the fact that Canada has not had a mortgage meltdown or not, the vast majority of residential mortgages in Canada are insured by either a Crown Corporation or one of its commercial competitors, which have fairly stringent underwriting requirements in return for the insurance. By law any high-ratio mortgage by a bank (over 75% LTV) must be insured. Domestic banking in Canada is fairly boring, very profitable business. When our banks have gotten into trouble (nothing they cant handle) it has been when they dabbled in the US markets with their investment bank subsidiaries and in Latin America, looking for big windfalls.

By: klynn

klynn — Fri, 26 Sep 2008 13:51:36 +0000

Then we need to spotlight this post like crazy…It might make an impact?

masaccio, I have been trying to get an answer to a question since yesterday. Why isn’t the netroots taking a stand on specific policy ideas on this? I’ve asked and no one answers…A few of us emailed hugh’s list to specific parties yesterday…But no netroots movement is emerging…

I thought the netroots was the modern day equivalent to Thomas Paine’s Common Sense which began some pretty amazing grassroots movements… if I recall correctly…

By: masaccio

masaccio — Fri, 26 Sep 2008 13:45:25 +0000

There have been efforts to get press at the national level, but it just doesn’t penetrate the fog of nonsense out there. A number of years ago, I was in state government, and a large financial institution failed. I got several calls from the big city newspapers, and not one of them understood the regulatory structures, let alone the possible solutions.