Obama unveils Radical mortgage plan

[illinoisprogressive]

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.

http://www.ft.com/cms/s/0/9fd5e4de-558e-11dc-b971-0000779fd2ac.html

[Pirate Smile]

1. Here is a DU thread on this based on a Daily Kos Diary on the article - does that make sense??

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=3485475&mesg_id=3485475

[1932]

2. I love the idea, but they're going to have to pierce the corporate veil to get at that money.

Those corporations existed simply as vehicles to transfer wealth out into the pockets of their executives and were never meant to last. They'll all go bankrupt and be dissolved before anyone pays any fine. They're going to have to figure out a way to extract that wealth from bank accounts and equity purchased with the ill gotten proceeds if anyone is ever going to see that money go back to the home buyers.

[dipsydoodle]

3. Was done in the UK

under the Financial Services Act where it could be demonstrrated that endowmment mortgages and investments etc had been mis-sold. The primary fundors were/still are forced to make reparation.

[1932]

5. Aren't most UK mortgage lenders banks who fund their lending through their deposits?

In the US most mortgage lending is funding by pooling the loans into securities which are sold to investors. These companies are not desiged to or expected to be around for decades, mush less for years or even months. Once the profit has been made, and can be paid out in salaries or sapped out through stock options. You can say that you want these companies to pay fines, but they are all going bankrupt and there one be any assets that will satisfy the fine even if the government gets lucky and levies a fine while the companies are still around.

[dipsydoodle]

6. If those companies go pop

who lands up with title to the properties ?

[1932]

8. Their successor in interest -- ie, their creditors. Whomever they owe money.

[democrat2thecore]

4. THAT is progressive politics!

Way to go, Obama!

[napi21]

7. I didn't read the entire plan, but from what you posted, it can't be done.

The lenders were unscrupulous, deceptive, immoral, and took advantage of people, BUT as far as I know, none of that is illegal, therefore cannot be punished with fines.

IMO, a much better plan would be to revise the rules for the lending industry. THEN if they break those rules, you CAN fine them.