An Open Letter To President Obama
Dear Mr. President:
As you know historically, since the great depression, refinancing mortgages has been this country’s exit strategy when it comes to pulling us out of the economic ditch.
So it’s nice to see that you are now pushing Congress to pass refinancing reform. It’s the most effective and efficient way to craft a bailout that actually helps everyone.
I’ve seen a number of bailouts which have been structured to save the banks, the bankers, and their bondholders. But never the average Joe.
But the truth is everyone, from the government to the private sector, relies on the consumer to keep the economy going. Saving the banks has so far done nothing to get us out of the economic doldrums.
So your effort to put a few hundred extra dollars in homeowners pockets is certainly a step in the right direction. I sincerely hope this isn’t an election year ploy and a true effort to rev up the U.S.’s economic engine. But you’ve got a long way to go to convince me and the American public that you are serious.
We’ve all heard the speeches, from you and countless other politicians. But what we need now is action.
Since your White House staff is soliciting the public’s opinion on this policy, please allow me to make this direct appeal to you sir.
Continue your focus on the underwater homeowners who are as you like to call them, ‘responsible’. In our efforts to save the ones who have fallen behind, it seems the vast majority of them (9 out of every 10 underwater homeowners are still paying their mortgages) have been forgotten and left out in the cold. You need to do more, much more.
These homeowners have been made to feel like suckers, their only reward for trying to do the right thing has been unconscionable interest rates. Your plan as it stands now will not offer them substantial principal reduction, so I suspect many will take the position that they don’t want to refinance their homes when they are so underwater.
And your plan I fear doesn’t do enough to hold the banks feet to the flames. Making refinancing easier for the banks to do isn’t the same thing as making them do it.
And if the banks aren’t going to do it on their own, then it is your job to force their hands. During your State of the Union you promised ‘smart regulation to prevent irresponsible behavior’.
Part of that regulation needs to focus on distancing your government from Wall Street. Capitol Hill now resembles some sort of human centipede of its own creation. We still can’t tell the difference between the government, the private sector, the Federal Reserve and the banks.
It’s all just one big ugly living organism without clear boundaries. And until you put those boundaries back in place, I suspect little will change.
But Mr. President, thank you for at least making an attempt to shake up the status quo. Your GOP counterparts refused to offer any substantive ideas beyond allowing the market to ‘correct itself,’ which I and my clients have yet to see happen.
While expanding the refinancing option beyond Freddie and Fannie backed loans is a nice idea, and some homeowners have had success through HARP 2.0, many more are still frustrated by the process.
It’s still basically optional for the banks to participate in, and there really isn’t much incentive for them to comply. As long as you’re dealing with securitized trusts, I’m not sure how the government will have the authority to get loans modified.
The problem as I see it President Obama, is that with all the energy and effort you are putting forth to persuade Congress to change the refinancing rules, it still do not address the root causes of the housing collapse.
The real estate market does not need another band-aid sir, it needs open heart surgery.
If the market was not completely dysfunctional, if it were not controlled by only 5 banks which possess over half of our country’s banking assets, I suspect you wouldn’t have to push this reform because the banks would have to implement it on their own in order to remain competitive.
These 5 banks together employ more than the population of 8 U.S. states and the District of Columbia (where you now reside). If that’s not proof the banks are too big to fail, and too big to jail, then I don’t know what is.
They have become omnipotent, invidious and insidious.
Mr. President you need to show true leadership, that is what this country is begging for. The proof that these banks need to be broken up is simply too big to ignore, and your legacy could be cemented if you stood up and did just that.
Instead of encouraging the banks to compete, make competition a necessity.
You must hold people accountable and responsible sir.