By John J. Sweeney
The mortgage crisis of today is that rare public policy issue that lends itself to a simple and utterly foolproof prescription: Just stop it. End it. Shut it down.
Right now, we need a moratorium on subprime mortgage foreclosures. Guaranteed, that will dam the flood of Americans losing their homes and their life savings. Government can do this—and fast.
Instead, however, we've got the Bush administration letting the business community control what happens to working families. The result, more "voluntary measures" for people with a huge self-interest in not stepping up to volunteer.
Working out a deal to freeze some mortgage rates is certainly a step in the right direction. But by itself, it's too little and too late. It leaves behind too many struggling home owners and leaves untouched too many longer term problems that are coming together in what may become a perfect economic storm for working families.
Economists are warning that we may be on the brink of a recession. Working families don't need to hear it from experts—we're living it. Wages are stagnant despite continued growth in our productivity—and our incomes are stagnant despite the economic contributions of working women to more and more households. Bad trade deals have exported good jobs that built our middle class. Health care costs are through the roof—literally bankrupting families. The only way we have been able to keep up—and to continue the spending that has kept the economy afloat—is by going deeper and deeper into debt. For millions of working families, that has meant putting in jeopardy their life's savings and future security by borrowing from their home equity. Plenty of lenders were ready to help them out—and to help out others trying to become home owners. I mean, to help them out of their safety nets with reckless and unscrupulous lending practices.
So across the country, working families' security and dreams are evaporating and communities are facing destruction.
Yes, we need the moratorium on home foreclosures and we need it now. Next, the mortgage industry and government must work together to replace those exploding teaser-rate loans with conventional 30-year mortgages at the teaser rate. Loan servicers have to renounce agreements that reward mortgage companies for foreclosing on homes rather than encouraging refinancing or other workout strategies. They also must disclose just how many subprime loans they are servicing, how many have reset, how many have been restructured and how many foreclosures are occurring and where. And then we need a massive outreach under federal government auspices to let subprime borrowers know how they can keep their homes. And it must be outreach on a scale that addresses the problem—more than a hotline to which the president gives the public the wrong phone number.
These steps will address the immediate crisis of home foreclosures. But that's not enough by itself. We have to address—urgently—the root problems in our economy: that it has been shaped to devalue work and workers in order to reward Corporate America and the wealthy.
It's time to do much more than worry about an impending recession. It's time to rebuild America's middle class with investments to create and keep good jobs here in this country, with an end to international trade structured to beat down working people across the globe, with health care reform that covers everyone and forces no one into debt or bankruptcy and with restoration of every persons basic human right to join together in unions and bargain collectively to improve their lives.
