Charles Schumer Calls For State to Protect Debtors From Foreclosure

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The junior Senator from New York, Charles Schumer, called on Federal agencies in the States to step in and do more to protect borrowers who face default and foreclosure on their loans. The great socialisation of risk continues in Western Welfare states, with nanny/bully States stepping into assume the liabilities (personal and financial) and take over responsibilities (personal and financial and physical) for private citizens.

“It is essential,” Schumer or one of his tax-payer funded lackeys wrote, “that the Federal agencies overseeing the financial markets use their influence over the major market players to encourage them to engage in a major effort to modify or refinance the loans that have a high probability of defaulting so that the upcoming wave of foreclosures that is anticipated can be abated and market confidence can be restored.”

Schumer knows a popular cause when he sees one. The call for a moratorium on foreclosures will go out just as surely as night follows day. It’s really just a question of who will make it first and when. The “who” can probably be whittled down to a short-list of long-shot presidential candidates who are more beholding to unions and organised labour than to Wall Street firms. It won’t be Hillary Clinton or John Edwards. But it’ll be someone. And it will happen soon.
 
Schumer shows that as bad as it’s been, it’s going to go get worse. “UBS estimates that the interest rates on US$339 billion in subprime loans underlying mortgage backed securities will reset between the third quarter of 2007 and the end of 2008.  The total volume of subprimes that will reset is even larger.  It is widely acknowledged that the loans which are about to reset are already performing poorly, with higher than expected default and foreclosure rates. Therefore the reset process is very likely to contribute to higher foreclosure rates, rates which are already alarming. Just yesterday, we learned that national foreclosure filings are 93 percent higher than they were this time last year.”

Our advice? Get your entertainment from America, but not your investments.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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5 Comments on "Charles Schumer Calls For State to Protect Debtors From Foreclosure"

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J at Not One Cent
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Hello. I found you in Google newsreader on my site so you must be famous. Speaking as an American, I will trade you 1 Schumer for 1 kangaroo, or 2 wombats.

Aggravated
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Stop the Subprime Bailout Can you spare a few thousand dollars to pay somebody else’s mortgage? Congress thinks you can, especially senators Christopher Dodd and Hillary Clinton. What’s more, a lot of the people you’re being asked to bail out lied on their loan applications or signed up for loans without reading the terms. Here’s what’s going on, as explained by Caroline Baum of Bloomberg.com: During the housing boom of the last five years, people with bad credit histories, many of whom lied about their income and nature of employment, got mortgage loans they weren’t qualified for to buy houses… Read more »
dubious pete in melbourne
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dubious pete in melbourne
Most of the people I know like American’s (as much as we can stomach their jingoistic naivety), but detest much of what the country now stands for- which resembles nothing of what their “founders’ established. Will we be disappointed when the Harvey Norman (no interest no deposit, 12 months) bailiffs come to the door of US companies and housholds and start asking for their pound of flesh? I don’t think so. Never mind mortgage bailouts- there’s nothing new in the U$ govt robbing its own citizens to bail out its cronies, the real threat is the fed’s inflating its debt… Read more »
kage
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There is a certain (albeit depraved) symmetry to this situation. Sub prime mortgage borrowers have in effect out-conned the con-artists on wall street, who in turn conned the hedge funds, who conned the super funds (,etc, etc). Now the USD (the ultimate con) will be vaporised, leaving the world with real reserve levels, as opposed to fictional USD. And the pollys want to con the voters into thinking they can escape their mortgages AND keep their houses ? Whatever they’re on, I want some !

dubious pete in melbourne
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dubious pete in melbourne
I am flabbergasted that Bill Gross from PIMCO could even suggest the US tax payer bails out these people. what? i thought pimco were safe, they have underperformed so miserably over the past few years because they were underweight USA, overweight AAA’s, underweight credit and US, and short on duration and DWE. they should be benefitting from the fallout, now he wants to save these peoples bacon? WHO does he represent? 10% of my OWN superannuation (401k) is in PIMCO, I don’t want him working changes that benefits someone elses portfolio. Forgive me but i thought capitalism rewards AND punishes?… Read more »
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