Comments on: Subprime Relief Deal Spurred by Fear of Pending Democratic Legislation http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of.html Mon, 23 Nov 2009 03:10:07 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: john c. halasz http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of.html#comment-2183 john c. halasz Fri, 07 Dec 2007 01:29:00 +0000 http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of-pending-democratic-legislation/#comment-2183 I'm with Tanta on this: make mortgages on the level with other debt in a Chapter 13 cram-down. The fact that that was given before Congress passed a law in 1978, and that judges still interpreted that law to allow cram-downs of mortgage debt until a Supreme Court ruling in 1993, should be precedent enough. And it would also serve as a regulatory deterent against any future recurrence of predatory or extravagently irresponsible and unrealistic mortgage lending and securitization practices. The slight drawback is that it might somewhat slow the correction of housing prices to affordable levels, though that might also be better macro-economic management of the disaster, and the spectacle of mass bankruptcies might also be a mass enlightenment about our actual political economy, even while acknowledging the equitable credit of those who did not succumb to the frenzy. Dean Baker's proposal that those whose houses are foreclosed upon be allowed to remain in their former houses at market rental rates would be much more difficult to administer and would probably require a publicly funded trust to transfer ownership, but still is worth thinking about. But any proposal from the Busheviks is bound to be a shit sandwich chased down with piss and vinegar. The only silver lining is that this should be the final nail in the coffin of the "ownership society". I’m with Tanta on this: make mortgages on the level with other debt in a Chapter 13 cram-down. The fact that that was given before Congress passed a law in 1978, and that judges still interpreted that law to allow cram-downs of mortgage debt until a Supreme Court ruling in 1993, should be precedent enough. And it would also serve as a regulatory deterent against any future recurrence of predatory or extravagently irresponsible and unrealistic mortgage lending and securitization practices. The slight drawback is that it might somewhat slow the correction of housing prices to affordable levels, though that might also be better macro-economic management of the disaster, and the spectacle of mass bankruptcies might also be a mass enlightenment about our actual political economy, even while acknowledging the equitable credit of those who did not succumb to the frenzy. Dean Baker’s proposal that those whose houses are foreclosed upon be allowed to remain in their former houses at market rental rates would be much more difficult to administer and would probably require a publicly funded trust to transfer ownership, but still is worth thinking about. But any proposal from the Busheviks is bound to be a shit sandwich chased down with piss and vinegar. The only silver lining is that this should be the final nail in the coffin of the “ownership society”.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of.html#comment-2180 Anonymous Thu, 06 Dec 2007 20:16:00 +0000 http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of-pending-democratic-legislation/#comment-2180 "Note that these proposed rules merely put consumers on the same footing as businesses in the bankruptcy process..."<br/><br/>Nothing scarier than a level playing field, eh? “Note that these proposed rules merely put consumers on the same footing as businesses in the bankruptcy process…”

Nothing scarier than a level playing field, eh?

]]> By: dd http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of.html#comment-2168 dd Thu, 06 Dec 2007 15:40:00 +0000 http://www.nakedcapitalism.com/2007/12/subprime-relief-deal-spurred-by-fear-of-pending-democratic-legislation/#comment-2168 It's more Bush spin and PR as that is the sum total of this administration. <br/>The real solution is to double minimum wage and mandate benefits (and yes give corporations yet another a giant tax break as an incentive) so dumb Americans have enough cash to pay their debts and that in turn will restore confidence in the worthless paper and add liquidity to the system. Yes, this is inflationary but what was once "bad" inflation becomes "good" in the right circumstances. A wage increase would also lower foreclosures as almost 80% appear to income/benefit related. It’s more Bush spin and PR as that is the sum total of this administration.
The real solution is to double minimum wage and mandate benefits (and yes give corporations yet another a giant tax break as an incentive) so dumb Americans have enough cash to pay their debts and that in turn will restore confidence in the worthless paper and add liquidity to the system. Yes, this is inflationary but what was once “bad” inflation becomes “good” in the right circumstances. A wage increase would also lower foreclosures as almost 80% appear to income/benefit related.

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