Barack Obama Editorial: Homeland Insecurity

Barack Obama wrote an op-ed in the Wall Street Journal.  He writes:

America is in a defining moment. This is the wealthiest nation in history. Yet many Americans feel that the dream so many generations fought for is slowly slipping away.

I’ve spoken with folks across this country who have worked all their lives to put their children through college, but now can’t afford the rising tuition. I’ve spoken with many others who’ve done everything right, but fell into bankruptcy once they became sick, because they couldn’t afford their skyrocketing medical bills. And since working Americans have to pay these rising costs with incomes that remain stagnant, many are falling deep into debt, unable to set anything aside for savings.

So at a time when many Americans have no margin for error, it’s no surprise that the downturn in the housing market has done enormous harm. In the coming years, over two million Americans could face foreclosure.

The larger risk, however, is that what is happening in housing could spill over elsewhere. A number of firms borrowed huge sums to make investments tied to the housing market. They are now suffering big losses that could trigger a slowdown of the entire economy. We’re already seeing some troubling signs. Consumer confidence is the lowest it’s been in years. Pension funds are losing money, threatening retirement security. And banks are also losing money, resulting in a credit crunch. That means businesses have less money to invest and people can’t get loans, which could lead to significant job losses in the months ahead.

This is a moment of challenge. But it’s also a moment of opportunity which we must seize, to make sure our economic future is secure. That starts with addressing the source of our economic woes — the crisis in the housing market. For most Americans, a home is not just a place to live; it’s their most valuable possession — so preventing a larger crisis in the housing market means providing greater economic security for middle-class families.

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Barack Obama Discusses Housing, Jobs, and Education with Black Enterprise

Black Enterprise magazine recently interviewed Senator Barack Obama about issues facing African Americans disproportionately.  They write:

Q. News about the housing industry has been mostly bad these past several months. Do you think it is the federal government’s responsibility to help homeowners fight and avoid foreclosure? And should lenders be penalized for making enticing loans that were doomed for failure?

A. I introduced comprehensive legislation more than a year ago to fight mortgage fraud and protect consumers against abusive lending practices. My STOP FRAUD Act will provide the first federal definition of mortgage fraud, increase funding for federal and state law enforcement programs, create new criminal penalties for mortgage professionals found guilty of fraud, and require industry insiders to report suspicious activity. The bill also provides counseling to homeowners and tenants to help them avoid foreclosure and gives borrowers additional rights to protect themselves during foreclosure proceedings.

As president, I will create a Homeowner Obligation Made Explicit (HOME) score, which will allow individuals to easily compare various mortgage products and understand the full cost of the loan. The HOME score would also help borrowers understand their long-term obligations and would be required to include mandatory taxes and insurance.

I will also create a fund to help people refinance their mortgages and avoid foreclosure. The fund will also assist individuals who purchased homes that are simply too expensive for their income levels by helping to sell their homes. The fund will help offset costs of selling a home, including helping low-income borrowers get additional time and support to pay back any losses from the sale of their home and waiving certain federal, state, and local income taxes that result from an individual selling their home to avoid foreclosure. The fund will be partially paid for by increased penalties on lenders who act irresponsibly and commit fraud. 

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Obama Demands Investigation into Subprime Loan Discrimination

Asks FTC to examine whether minority homeowners are being targeted with high-priced loans

WASHINGTON, D.C. – U.S. Senator Barack Obama (D-IL) today sent the following letter to FTC Commissioner Deborah Platt Majoras, calling on her to investigate the marketing practices of subprime lenders and the brokers of subprime loans to determine whether minority borrowers have been victims of discrimination. According to recent studies, and an editorial in the New York Times, there is increasing evidence that black and Hispanic borrowers were more likely to be steered to high-cost subprime loans than other borrowers. Hundreds of thousands of African American families – many of whom probably should have been eligible for lower cost prime loans instead of riskier subprime loans – could potentially lose their homes in the coming years.

In the letter, Obama requests that the FTC investigate whether there is evidence that lenders or brokers target poor or minority borrowers with higher cost products, whether lenders are engaging in deceptive marketing practices, and whether the lack of lower-cost borrowing options has disproportionately disadvantaged minority borrowers.

Speech: Obama Calls For Greater Openness, Transparency On Wall Street

Senator Barack Obama is scheduled to deliver the following remarks today at the NASDAQ Marketsite. Obama will argue that the “what’s good for me is good enough” mentality that has crept into certain corners of the Washington and the business world has led to bad-for-business practices that don’t just offend our morals, but endanger our markets. Using the subprime mortgage crisis that has led to today’s economic uncertainty as an example, Obama will discuss why the American economy and the American people benefit from policies that ensure openness, transparency, and honesty in the marketplace. Obama has been a leader in raising awareness of the subprime issue, and he will reiterate his call for more disclosure in the housing market. To ensure that no conflict of interest exists between rating agencies and the people they’re rating, he will also call for an immediate investigation into the relationship and business practices of rating agencies and their clients.

Finally, Obama will ask Wall Street to join him in supporting an economic agenda that will level the playing field for the American people and ensure America’s prosperity in the 21st century. Obama is scheduled to deliver a speech on Tuesday in Washington DC where he will outline specific tax policy proposals.

Barack Obama Editorial: Fine Unscrupulous Lenders

(h/t Donna)

Barack Obama wrote an editorial in the Financial Times yesterday about the mortgage lending and foreclosure crisis. He wrote:

The implosion of the subprime lending industry is more than a temporary blip in our econ-omic progress. It is a cancer that, given today’s integrated financial markets, threatens to spread with devastating impact to housing and to our economy as a whole, unless we act to contain it.

It is also a parable about howan excess of lobbying and influencecan defeat common sense rules ofthe road, placing both consumers and our nation’s economic well-beingat risk.

This all started as a good idea - helping people buy homes who previously could not afford to. But over time, lenders began pushing low-income buyers into homes they could not possibly afford, abusing the system by lowering their lending standards, making loans that required no money down and offering low, teaser interest rates that explode after the initial grace period. Some borrowers were also lying to get mortgages or engaging in irresponsible speculation.

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Obama Seeks To Fine Unscrupulous Mortgage Lenders to Address Foreclosure Crisis

The Financial Times reports:

Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the proceeds used to help bail out borrowers facing a wave of foreclosures, according to Barack Obama, the Democratic senator running to be his party’s presidential candidate.

The proposal is among the most radical yet from a leading Democrat and comes as Washington tries to respond to a growing wave of foreclosures and a crisis in credit markets.

It also comes amid greater discussion in Washington on whether the mortgage industry – including credit rating agencies involved in rating mortgage-related securities – should be more tightly regulated to prevent a repeat of the crisis.

Writing in today’s Financial Times, Mr Obama blamed lobbyists working on behalf of lenders for obstructing tougher regulation of the subprime industry, adding: “Our government failed to provide the regulatory scrutiny that could have prevented this crisis.

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