Great 30 minute video cast from AARP’s Inside E Street. Balanced and meaty information about reverse mortgages all the way through to the end. This is a good piece for consumers about what to look for and think about when considering a reverse mortgage. I encourage consumers to watch the entire video.
http://link.brightcove.com/services/player/bcpid24036493001?bctid=44798109001
Having been denied a Loan Modification on my home, I am seeking further help in trying to reduce my monthly loan payment. Chase has stated that I have too many assets, but these assets are my declining IRA. If I can reduce my monthly payments I may be able to stay in this home longer. Once these funds are depleted, I will be broke and I am 71 yrs old. HELP!
Thanks for calling me back and taking the time to discuss my situation and the various options we may have to help us stay in our Lake Arrowhead home. You requested that I e-mail you so you can in turn offer me an introduction to Melinda Opperman of Springboard for further consultation. While we are still “current” on the first and in no eminent danger of foreclosure proceedings, we desperately need to address our long-term situation to insure there’s a way to keep things under control as our savings continue to dwindle due to a negative cash flow which needs to be reversed. I’ll look forward to meeting you tomorrow at the State Assembly Speaker Karen Bass and Assemblymember Carters event and receiving any constructive guidance you may be able to offer. Thanks again
Reverse Mortgages are a type of home loan. Most reverse mortgages are a HUD/FHA insured home loan that allows you to liquidate some of your equity in order to payoff existing mortgages as well as generate additional cash flow. They are called HECM Loans. HECM stands for Home Equity Conversion Mortgage.
Due to the no credit and no income requirements, a reverse mortgage can be an excellent financial tool for a senior who is having a difficult time with cash flow. On occasion a refinance using a reverse mortgage has been utilized to avoid foreclosure. This is rare, but becoming more widely accepted and known. (Banks don’t enjoy the bad publicity when they foreclose on a senior.)
There are 3 types of HECM Loans.
Reverse Mortgages are regulated and insured by the Federal Housing Administration (FHA). By law, you can never be forced to sell your home of move. You will always retain the title to your home, and you can still leave your home to your children or whoever you choose. There is almost no risk of losing your home. The homeowners obligations are threefold:
Who Qualifies?
Homeowners may access loan proceeds in various ways.
As with all other FHA Home Loans, a reverse mortgage is a “Non Recourse” loan. This means that the lenders only security for repayment of the loan is the home itself. The lender has no rights to lien any other assets of the borrower or their estate. Only the home itself can be used as the lenders recourse to a foreclosure. If the home is worth less than the outstanding balance of the reverse mortgage then the lender must go to FHA for reimbursement of any loss. The loss will not generate any judgements or liens against the borrower or their heirs.
Here is a link to HUD’s Reverse Mortgage Website: http://www.hud.gov/offices/hsg/sfh/hecm/hecmhome.cfm
A Non-Profit Corporation
www.freehomeownershiphelp.org
October Housing Report
In Riverside County:
Notice of Defaults-Over the last 120 days=14503 (Sept=14998)
Notice of Trustee Sales Currently Scheduled=15392 (Sept=14575)
Actual Trustee Sale-Over the last 120 days=7139 (Sept=7518)
In San Bernardino County:
Notice of Defaults-Over the last 120 days=11652 (Sept=12044)
Notice of Trustee Sales Currently Scheduled=12501 (Sept=11685)
Actual Trustee Sale-Over the last 120 days=5598 (Sept=6258)
Commercial, Apartments, Industrial, Agriculture & Land/ last 120 days
Riv. NOD=438 NOS=240 Sale=279 (The largest number is land)
SB. NOD=337 NOS=179 Sale=232 (The largest number is land)Source, Foreclosure Radar
Riv. Foreclosures are down 38% over 2/08. SB Foreclosures are down 31%
However, the number of state wide homes scheduled for foreclosure has more than doubled during the same period.
Information on your specific area is available, as is beneficiary information for Government Code Enforcement purposes.
With All The Empirical Evidence, Why Are They Telling Us We’ve Hit Bottom?
Ben Bernanke declared the recession, “likely over”, which will hopefully have a continued effect of creating market confidence. His use of the word, “likely” is an obvious attempt to hedge his bet amongst the possible negative effects of the adjustments in the 1.7Trillion Alt-A and Option Arm mortgage backed securities. The signs of recovery are there, even while many remain unemployed.
My own personal opinion is that while we may see segments of the Country doing better, California will not. Sadly, I believe that more correction will take place. In a market where everyone was a buyer and everyone had a hand in getting even the most marginal borrowers into a home, we have yet to pay for our past mistakes in full.
As has been widely reported, it will not feel much like a recovery for some time due to the high rate of unemployment. Especially, here in the Inland Empire, we have been hard hit by unemployment rates in the mid and upper 14% range. With that said, Dr. Husing believes that the inventory of homes that will eventually go into foreclosure and be sold at a trustee sale will actually be absorbed without too much of a negative impact on values due to an affordability index around 65+%. The demand he tells me will remain high enough to handle the homes that will be taken back by the banks. Of course, in discussion, there is always the caveat that if the number of defaults being recorded with the County Recorder’s office is false, due to the banks unwillingness to proceed with recording a default on a borrower who has fallen behind, the numbers of course could be giving a false read.
I am of the mindset that this is occurring more than we realize. Plus, when one factors in those individuals who have wanted to sell but due to market conditions have not, we have a chance of an even greater supply when they are forced to sell due to life circumstances unrelated to their own personal economics.
Why would a bank not record a default? Additional reported risk may be one reason. No need to do so since they received TARP funds is another and simply being overwhelmed with an unexpected demand from borrowers no one thought would seek a modification, is still another. Read on…
Borrowers Who Are Not Behind Are Flooding The System… So says Greg Hebner, President of Irvine based, Mortgage Outreach Services.
“First let’s talk about the challenges. No one could have predicted the myriad of challenges that have emerged within the HAMP program. One of the biggest early surprises, and one that continues to grow daily, is the immense number of calls from borrowers who are actually current with their mortgages. These are not borrowers that have fallen behind and are facing imminent foreclosure. They’re individuals who have kept up with their payments and simply want to know if they qualify under the government’s plan. The deluge of phone calls from these borrowers has placed an enormous burden on servicers’ front end systems. Industry wide, customer service representatives are struggling to provide these current borrowers with clear answers, which can be particularly challenging if the borrower does not qualify under HAMP guidelines, many borrowers hang up, unsatisfied with the answers they receive, only to continue their efforts by calling back a week later.”
By The Numbers
Treasury assistant secretary for financial institutions, Michael Barr, said that participating servicers have extended offers on over 570,000 trial modifications with over 360,000 trial modifications already underway.
Many have reported, for varying reasons, that there doesn’t seem to be any real rhyme or reason to the trail modifications being offered. The rush to reach numbers seems to be more important than making sure those who are in the program can actually afford to stay there.
The Non-Profits I have worked with avoid this, but I cannot speak to others. When I read reports from industry experts who claim a big reason why close to 47% of the modifications in place fail within eight months, they say it has to do with not hiring the properly trained staff to handle the request and confirm who actually should be receiving a modification.
“Judging from the numbers I’m hearing from my industry counterparts, there is significant fallout from these modifications,” says Marc Helm, chief operating officer of Reverse Mortgage Solutions, Spring, Texas, who has years of experience in loss mitigation.
Allowing a borrower to sign up trial loan modification papers as a way to buy time means higher and unnecessary loan investor losses, “because you’re dragging that asset before it can be liquidated,” he says.
Not to mention in a declining market you just cost everyone more.
We have been reporting for months that we seem to be postponing the inevitable at a great cost to our local economy. The desire to assist victims of fraud is noble. However, to believe that everyone was a victim is not necessarily healthy for our overall economy. Truth be told, many simply gambled, knew exactly what they were doing and are now frustrated and claiming to be a victim in the hopes that someone will help them obtain a loan that they can afford. The challenge is this, they never could have afforded the home and no amount of modification of terms will have any lasting impact.
The main reason behind today’s problems is because the mortgage industry made loans it never should have made, Mr. Helm says, because not everybody can be a homeowner. Looking back into those past mistakes he finds today the industry cannot turn around and say, “Everybody should have a modification and save that home, when we know a big percentage of those are not going to work just like a big percentage of those mortgage loans of the past did not work.”
“ It just turns modifications into a moratorium. And moratoriums already have received negative press as political measures disconnected from market reality that justify a borrower’s inability to pay the mortgage either willingly or unwillingly.”
AMEN. The best thing we can do for those who are struggling is to demonstrate real care for them by explaining the facts about modification numbers and then explain, in detail, the short sale process and how the GSE, the Treasury, The industry, The Realtors and virtually anyone else who understands that we need to move our economy forward by getting on with a difficult task at hand, believe this will help troubled borrowers get back into the housing market sooner.
Fannie Mae’s own guidelines have been updated recently to encourage homeowners to cooperate with Pre-Foreclosure measures (Short-Sale). They are no reporting that they will purchase loans after just two short years. FHA has always been three years. If we can teach the public what they need to know and then teach a new group of buyers what they need to know to become responsible homeowners, we will at least begin this journey and kick start our economy instead of wringing our hands wondering how we are going to keep that 800 payment on a 400,000 loan.
While there always is a possibility for a distressed borrower to improve their personal finances in time, job loss remains the main factor that contributes to higher default and foreclosure rates, so it will continue to drive the mortgage market going forward.
Right now the numbers show a bleak picture. According to the Hanley Wood Market Intelligence October report, unemployment jumped to 9.8% in September, the highest it has been since June 1983 resulting in an acceleration in job losses in many major sectors of employment including construction, services and retail in September. It suggests continued losses in the labor market “will limit efforts for an economic recovery.” With the IE hovering around 14 to 15%, you can see why I am nervous.
MBA (Mortgage Bankers Association) President Offers Quote Of The Month
“A lot of Elmer Fudds are firing shotgun blasts our way,” MBA president John Courson opined, comparing mortgage bankers to Bugs Bunny and the cartoon character’s eternal battle with his ever-stuttering nemesis. “Not since the 1930s has there been as many proposed sweeping changes in the way we do business.”
As I mentioned many times, we are throwing the baby out with the bathwater. The rules/laws/tools are already there to take care of most of the issues. It was a stated income and stated asset market, created by the big banks we are now bailing out, that caused all of this. FHA, is not, was not and will not be the problem. Full doc loans were not the problem; yes dare I say it, even in the sub-prime world. It was when they simply began giving loans based solely on FICO scores that things went bad and went bad fast.
Market Predictions From Those Who Should Know
David Stevens, head of the Federal Housing Administration, said his main challenges are in “three core areas,” none of which have little or nothing to do with restoring the secondary market. “There won’t be a private securities market next year,” Mr. Stevens flatly predicted, noting that it will be next to impossible to restore investor confidence when housing values are still falling. And still falling they are, he said, by 10% more in 2010.
James Lockhart, former director of the Federal Housing Finance Agency and current executive at WL Ross & Co. had this to say;
“It’s unprecedented at this point — that 8% of all mortgages are serious delinquent,” said Mr. Lockhart. He noted that even though 5.4% of all “prime” loans are seriously delinquent, Fannie and Freddie have better numbers — in the 3% to 4% range. “Given that relatively good performance, when you’re sitting on $5.5 trillion of mortgages, it’s going to hurt,” he said.
As a footnote; Over 2/3rds of all of the credit losses are concentrated in five states; AZ, CA, FL, MI & NV.
On a quarterly basis Fannie and Freddie currently are suffering from combined loan markdowns of more than $8 billion and have been building loss reserves dramatically. Their former regulator believes this will continue until unemployment declines and the overall economy improves. But, he warned, if home prices fall another 20% “all bets are off.”
Let us pray we stay closer to the 10% mark.
Zillows President, Spencer Rascoff Had This To Say;
In a recent interview with Bloomberg television, Rascoff discussed the 1,400,000 homes that are over 90 days late and have yet to be foreclosed upon. Approximately 200,000 of these homes are over a year behind. Yet no foreclosure.
Rascoff went on to say that without stabilization of unemployment and an increase in the job market the housing market will continue to struggle and actually further deteriorate. He is further worried if the Fed’s stop buying mortgage backed securities in the first quarter of 2010 as is currently set. He believes this action will actually increase interest rates by as much as 1 full percent and this would take away about 20% of a current buyer’s purchasing power.
Between the steady flow of foreclosures continuing to come on the market as well as the normal pent up demand of those who simply need to sell for normal reasons, he is worried that this gluttony of inventory will further depress the market through 2010. He believes we will see a few years of near zero percent appreciation and then a very slow gradual, single digit rise in values. He believes it will be fifteen years before we get back to our peak value of 2006.
If one looks at wages and then factors what one can afford based on those wages, you can begin to get a clear picture as to why he believes what he believes. If you factor in predictable wage increases it will take us at least that long to get back to our 2006 peak levels.
8k Tax Credit, getting closer
Without Congressional action, the credit, which the Internal Revenue Service says has already been claimed by 1.4 million taxpayers, is due to expire at the end of this month. It was extended by a vote of 416 to 0 to servicemen who served overseas in 2009 for a period of six months. We will have to wait and see what they will do about the rest of the potential buyers.
FHA Modification Is Getting Traction With larger Servicers
In brief, this program allows a servicer of a GNMA pool loan to set aside up to 30% of a loans principal to be paid back at a later date once the homes equity position allows it to occur and the homeowner is ready to convey title. This, “shelved” principal accrues no interest and the 70% remaining is re-amortized in order to lower the payments to an amount that will hopefully allow the buyer to have a successful modification defined as the buyer remaining in the home.
Buyers and Banks, Both, Are Suing Realtors
Disputes involving property-condition disclosure now outrank those over agency issues, a catchall classification that includes buyer representation and the breach of fiduciary duty. And issues involving the federal law intended to protect consumers from being overcharged at closing comes in a close third.
Water intrusion and the mold problems that often follow are a major issue. “Water is always a big nondisclosure issue,” says one respondent to a industry survey. “Mold not so much anymore, but water always and mold follows.”
Disputes concerning structural defects are also extremely common, for various reasons. And issues concerning septic and sewer systems, misstatements about square footage and “as is” clauses also generate more than their fair share of legal problems.
Many of these disputes arise when the seller is a bank. The problem with water and mold is linked to the foreclosure crisis by several respondents, one of whom says water intrusion “has become a larger issue due to the number of houses not being maintained” or sitting empty for long periods of time.
But other comments point to the need for better training, if not greater adherence to the law. Says one respondent: “Agents misunderstand the requirement to disclose [known] material defects and even what constitutes a material defect.”
Though RESPA is by and large a lending law, agents stand accused of taking kickbacks or forcing clients to use service providers in which the agent has a financial interest.
And that brings us back to the infighting among agents and brokers over commissions. Disputes over money are significant, according to half the respondents, and three out of four believe the issue would increase in importance over the next two years.
And now one can see why we created the HELP Certification. Recognizing these issues exist is the first step in cleaning them up. Our goal is to be a trusted and reliable resource for Government and non-profits alike. If they believe we are doing a better job of stressing ethics and fiduciary responsibility than what has been achieved to date, then we will continue to win praise from both the public and those who wish to serve the public.
Speaking Of Protecting The Public
SB-94 Calderon of Montebello
SB-94 was signed by the Governor and in short prohibits anyone from charging upfront fees when negotiating a promissory note. By and large this is good and was necessary, but I feel that some homeowners may now be underserved as not 100% of the Attorneys or Brokers were bad people doing bad things. Many cared deeply and like the HUD Approved Counselors, have to run a business and feed their families, but now, can no longer do so. It will be up to borrowers to go it alone, which I never recommend, or connect with a reliable non-profit in their area. A quick way to find one is to follow this link and ask for a list of HUD Approved non-profits in the area you are interested in; http://www.nfcc.org/ These Non-Profits are a resource paid for by the local and Federal government.
Credit Unions Need Help Too
The Treasury Department announced plans last week to start buying troubled mortgage assets as early as this week in a program that will provide some relief for troubled credit unions, especially corporate credit unions holding large portfolios of underwater mortgage-backed securities.
Five private investments funds have agreed to invest $1.94 billion of their own money and combine it with Treasury loans that will provide more than $12 billion for the Public Private Investment Partnership. The Treasury hopes to expand the program to buy as much as $40 billion in toxic assets from banks, credit unions or securities firms under the program.
The program is an outgrowth of the original Troubled Asset Relief Program which was supposed to use $700 billion appropriated by Congress to buy up toxic mortgage assets. Instead, much of those funds was used to prop up troubled banks with equity investments. The Treasury then scaled back the program to leverage private funds to fund the asset buys.
Now, Even The Treasury Is Pushing Short Sales
Treasury is set to announce a new program to help troubled borrowers whose mortgages are deemed ineligible for modification. Speaking at the Mortgage Bankers Association’s annual convention, Ms. Maggiano said Treasury would set out the parameters under which servicers can earn financial incentives if they offer borrowers the option of participating in a short sale and deed in lieu of foreclosure. “There’s really no magic. We haven’t reinvented the wheel,” Ms. Maggiano told industry executives in San Diego. To cut down on the paperwork, the program will provide a standardized set of forms. It will also cap the amount of money that can be paid to subordinate lien holders who agree to waive their interest in a property. The government expects that some second mortgage investors will “walk away” from the program because the compensation being offered will be too little. But Ms. Maggiano, who is director of policy in the preservation office, told a standing room only session that by setting a limit, the White House is hoping to eliminate time consuming back-and-forth negotiations between servicers, borrowers and investors. “We are hoping to set an industry standard so investors will know exactly what they can expect,” she said.
Closing Thoughts
I recently taught in a community and a gentlemen and I discussed in front of over two hundred attendees about the moral dilemma for those who struggle with whether or not they should continue to pay on a mortgage that is upside down by hundreds of thousands of dollars, because of the “promise to pay.”
I began this journey feeling passionately one way but I have talked to too many who have lost everything. I have cried with grown men. I have seen absolute greed; the likes I never knew could exist. Today, my convictions have waned considerably as I have come to realize that the guy who worked at the County for twenty years and saved his money and lived within his means appears to have been taken advantage of.
This guy who paid his bills and bought his dream home in 2005, had no idea of the carnage that was about to fall upon him and his family due to the unrestrained lending practices propagated by the Country’s largest lenders. He had no idea that they would create buyers around him that never qualified in any traditional sense and therefore they created a false supply and demand economic model, which was destined for failure. Now the County employee is furloughed, cannot afford his home, denied a modification due to negative equity and is being told to trust his leaders who continue to spend tax dollars bailing out the very lender who created this catastrophe in the first place.
This journey has changed me. I am angry for those whose dreams have been lost and their hope for retirement is gone. All the while, the banks are increasing fees, reporting record profits never seen before and lobbying our Congressman and Senators to not vote for the new Consumer Protection Agency.
I believe you need to do what is right for you and your family and feel comfortable, if I just described you, that you are not doing anything immoral by not keeping a promise to pay, when they stacked the deck against you to this degree. Your health and your family are far more important.
With the utmost respect to those of you who did what was right,
Chris Sorensen, Founder, USA HELP, Inc.
How can I lower my existing interest rate. I have a Loan with Chase on the owner occupied Loan. I have tried to talk to them but they tell me the Value on my home is less than the Loan amount so I cannot refinance my loan. I have not defaulted in two years on any of my loans.
The Treasury announced recently in San Diego that they will be releasing a program that is intended to standardize the short sale process and offer incentives to servicer and investors who participate. Either this week or next the announcement should come and it will be a welcome announcement for Realtors who have had a very difficult time dealing with negotiators who have been making decisions that are detrimental to all involved.
Short sales are complicated and have many traps associated with them. Make sure you choose your professional wisely and be sure they are HELP Certified so that you know they will be held to the highest ethical and knowledgeable standards.
I have a first @ 5 1/2%, bal of 165,200 pymts are 1,200 @ B of A and a 2nd 56,000 @ approx 7%, pymts are 500. @ Arrowhead C.U. I still have some equity, and I tried to refi in May when rates dropped to 4 1/2% but they said my loan to debt ratio was too high. I bought my husband out 2 1/2 yrs ago at peak. I am divorced, have 3 renters to help me make my payments. My hrs, @ work were cut back to 24. My mom had been living with me for several yrs. but she passed away in Jan. She had been helping me financially. I have great credit and have tried to do everything right but it is getting more and more difficult. I have not missed any pymnts as of yet. PLEASE ADVISE thank you.
Artificially low interest rates are not necessarily a good thing.
If you are a buyer considering taking advantage of this historical market, my suggestion is that you do so, sooner rather than later. The debate about rates and the fact of whether the values have stabilized or not will rage on. The truth is no one truly knows. I do know that we buy homes for more than simply investment reasons. We buy for shelter, stability, the American dream and the desire to have a place we can call our own. Take advantage of this market if you can and utilize the historically low interest rates available to you today. Rates will most likely have to go up.
The devaluation of the dollar and the amount of debt we continue to pile on ourselves is not healthy and most economist are worried.
The economist that are paid by the Government, which of course want you to be comforted, are reporting positive news. Industry groups pay economist to report positive news becasue it serves their groups interest. I realize I may a bit cynical, but I want those of you who have begun to trust that I am doing my best to report the truth over what may be popular, that there are factors at play here that are unique to this particular market that have never occured before. We have created another false market by bailing out banks instead of forcing them to sell assets at a loss to investors, who didn’t make poor choices. They would place those homes on the market and we would at least get started with the reality of our circumstances that I believe we are ignoring.
If I were considering buying today, I would do so for the reasons mentioned above, for the awesome tax benefits and because I intend to be there for a long time. Any devaluation that may occur, I believe would be offset by a low fixed rate and the length of time I intend to remain in my new home. If you are waiting for the bottom, I can’t help you. Your Government refuses to allow those who made poor choices to lose, for fear of what it will mean, pain. Guess what, we deserve the pain. Everytime you voted for someone without knowing their stance on economic policy, you contributed to what we are facing today! If you feel convicted, please do not get angry with me.
I read an article that I found interesting. The authors opinion is shared by many out there who are independent from the government, or industry groups with a possible agenda, I seem to gravitate to them over the aforementioned industry economist.
Here is an excerpt from Harry Longs writing;
Capital goes where it is treated best, like customers for fine dining. When meal sizes are anemic and interest rates are low, customers leave and head for more hospitable, higher yielding environs, or commodities.
Economists take it as unquestioned dogma that low interest rates are stimulative. Of course, ultra low interest rates are not stimulative to the real economy, they just increase asset prices. Rather than accept conventional arguments using faith based reasoning, a far more scientific approach is to examine the evidence.
I would argue that extremely low interest rates suck investment funds and liquidity out of nations. You heard it here first, and the evidence is clear. Money has flowed out of U.S Equity ETFs and into Global ETFs. (Click here for ETF explnation: http://www.wisdomtree.com/index.asp )
Many argue that the U.S. could never share Japan’s experience of a quarter century bear market in which stocks dropped over 75% with interest rates at or near 0%.
If we do not wish to share such an experience, why are we repeating the same policies which led to such results? What policies did Japan pursue? Near zero interest rates, the propping up of zombie banks, and the arbitrage of replacing of managerial competence at financial institutions with political competence aimed at securing taxpayer charity.
Does this sound familiar? Money flowed out of Japan starting in the early 90’s and into economies such as ours. The tech boom was supercharged by a massive Japan-funded carry trade. We may be funding such a boom in emerging markets and commodities right now to our detriment. Liquidity and investment funds will continue to flow out of the U.S., as they have, if we do not change policies which are contradicted by logic and clear evidence.
The public needs to understand that good policies are not about slogans, or personalities–they are about sound quantitative practices based upon clear arithmetic. As Keynes said of inflation, less than 1 person in 100 may understand it, but turning the dollar into a carry trade currency is unsound, procyclical, and will suck liquidity and investment funds out of the U.S. to our long term detriment.
For the investor, global macro is about understanding the global flows of capital and the drivers behind them. Sound advice is to follow the money.
In simple terms, let me say this, we are broke. We have spent too much. Equity is gone and investment is going out of America far more than what is coming in. Printing money and propping up a false equity position in a home is not the proper long term fix or healthy for the overall market. We need to take matters into our own hands and realize that YOU ONLY DID WHAT THE BANKS AND GOVERNMENT WANTED YOU TO DO AND BELIEVE, THAT IF YOU BOUGHT A HOME AND PAID MORE THAN YOUR HEART/HEAD THOUGHT IT WAS WORTH, THAT YOU COULD ALWAYS SELL IT AND MAKE A PROFIT AND YOU WOULD BE OKAY. Don’t beat yourself up for doing what you were told. If you cannot afford your home, you don’t have to financially destroy yourself and your family so we can prop up the financial institutions that put their interest far above their Country. Elect those who can say no to the financial companies, short sell your home if you must and lets begin to move this economy. Your loss will be a young familys gain. Your loss will be a soldiers once in a lifetime opportunity to become a homeowner. You will buy again and we will be okay but I urge all of us to take our financial matters into our own hands and do what we know is right over what we are being told to do by those who have squandered our Countrys wealth.
Respectfully to all, Chris
“Power tends to corrupt, and absolute power corrupts absolutely.”
Lord Acton made this statement in a letter he penned to Bishop Creighton in 1887. It could be said that this notion was the premis for the Glass-Steagall Act of 1933 when the government sought to prevent too much consolidation of financial power within too few companies. It was a good Act and served our Country well.
However, Senator Phill Graham sponsored legislation that was signed into law by President Clinton, which repealed this Act and allowed for a series of mergers and aqusitions leading the way to consolidation the likes we had never seen.
This power now rest with a few companies which serve our mortgage, credit, financial and insurance needs. Their global reach is far and wide and the ability of US regulators to understand and enforce existing rules to deal with the systemic risk associated with these conglomerates, is non existent. Therefore, they are forcing the leadership in Wahshington to take on risk and debt which is unsustainable, all based on the idea that to do otherwise would lead to financial collapse of the free markets we know today.
Here is a simple definition of the Act from Wikipedia:
The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, (Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999-2001) which repealed part of the Glass-Steagall Act of 1933, opening up the market among banking companies, securities companies and insurance companies. The Glass-Steagall Act prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and/or an insurance company.
The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms and insurance companies to consolidate. For example, Citicorp (a commercial bank holding company) merged with Travelers Group (an insurance company) in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica and Travelers. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act of 1956 by combining securities, insurance, and banking, if not for a temporary waiver process.[1] The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the “financial services industry”.
If you have an opinion on this subject I’d love to hear from you and do not be afraid to express it to your elected leaders who wish to represent you and your collective desires.
Chris
