GOP Says ‘No’ To Bailout American Homeowners

Responding to a plan President Barack Obama proposed Wednesday to help responsible but adversely effected homeowners refinance through a direct landing program, House Speaker John Boehner said “none of these programs have worked” implying a GOP refusal.

Although controversial, US Government practice of financial assistance to stabilize the economy, or so called bailouts, have been practiced since the early 1900s. Government has been wagering in banks, steel mills, and coal mines and even taken control of everything from railways to savings and loans consistently.

Bailing out financial institutions has a long history in US economy, even before the efforts to save AIG, Fannie Mae and Freddie Mac. In 1907, John Pierpont Morgan (J.P. Morgan) himself organized efforts to avoid bank closures by asking U.S. Treasury assistance, prompting the creation of the Federal Reserve System six years later.

Here is a short list of some of the bailed out institutions; New York City Trusts, Lockheed Aircraft, Continental Illinois, Chrysler, Federal Savings & Loan Insurance Corp, Long Term Capital Management, U.S. Airlines, Goldman Sachs Hedge Fund, Countrywide Financial, E*Trade Financial, Citigroup, UBS, MBIA, Bear Stearns, AIG.

In most cases Government interventions were necessary, temporary and effective in times of financial crisis, war or other national emergencies.

75 years ago, when President Franklin D. Roosevelt faced the widespread threat to homeownership, the likes of which President Obama is now tackling, he proposed a bold “bail out” program requiring legislation to protect homeowners and adopt a national policy to safeguard homeownership, a plan comparable to what our current president is putting forward.

FDR facilitated the establishment of the Home Owners’ Loan Corporation (HOLC) in 1933, a New Deal agency launched via the Home Owners’ Loan Corporation Act. Its purpose was to refinance home mortgages –direct lending from Government- to prevent foreclosures. It was a temporary agency seized its operations and closed in 1951.

FDR’s valiant bet on “the little fellow” has worked. HOLC offered more services and support for borrowers than the banks have ever envisioned or attempted. Delinquent loans got individualized attention; homeowners received debt counseling, family meetings, and budgeting help. By the time the agency was closed in 1951, the real estate market was stabilized and on its way to functioning without support.

While the argument over if the American economy’s perpetual cycle of ups and downs stems from systemic failures or it is a reflection of policy choices goes on Americans struggle to understand their financial demise.

Each foreclosure means decline in house values and eroding wealth. Vacant properties attract crime and threaten neighborhood stability and significantly exhaust municipal resources, adversely effecting entire cities, states and our nation’s economy.

It is time for GOP to end its political delay tactics and do their job what their constituents have sent them to do in Congress; watch over the American people’s interests. It is time to bail out the everyday hard working Americans who have done nothing but to dream the American dream of one day owning a home of their own.

“Here should be an objective of Government itself, to provide at least as much assistance to the little fellow as it is now giving to the large banks and corporations.”–Franklin D. Roosevelt, April 7, 1932