Scandal: Obama's secret love letters to powerful * administration figures

[anigbrowl]

Edit: Ha - I thought that would get your attention.

Came across this little snippet on Kos (http://www.dailykos.com/story/2008/3/25/85626/5111/369/483717), about a letter Senator Barack Obama sent to Ben Bernanke and Hank Paulson suggesting the urgent necessity of a housing summit to stem a wave of foreclosures across the US.

I reproduce the letter in full, since as a communication by a US Senator, it is in the public domain. You might ask, so what? Everyone knows we're in the middle of a subprime mortgage meltdown and homes are at risk. Isn't this just 'me-too-ism' by Senator Obama, trying to hitch a ride on the wave of bad financial news?

Well, look at the date on the letter. I've highlighted one line below to point up what I consider to be a particularly significant bit of foresight, though I doubt anyone who doesn't share my interest in finance and economics will see the significance of this.



March 22, 2007

The Honorable Ben Bernanke
Chairman
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, D.C. 20551

The Honorable Henry Paulson
Secretary
U.S. Department of Treasury
1500 Pennsylvania Ave, NW
Washington, D.C. 20220

Dear Chairman Bernanke and Secretary Paulson,

There is grave concern in low-income communities about a potential coming wave of foreclosures. Because regulators are partly responsible for creating the environment that is leading to rising rates of home foreclosure in the subprime mortgage market, I urge you immediately to convene a homeownership preservation summit with leading mortgage lenders, investors, loan servicing organizations, consumer advocates, federal regulators and housing-related agencies to assess options for private sector responses to the challenge.

We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes. And while neither the government nor the private sector acting alone is capable of quickly balancing the important interests in widespread access to credit and responsible lending, both must act and act quickly.

Working together, the relevant private sector entities and regulators may be best positioned for quick and targeted responses to mitigate the danger. Rampant foreclosures are in nobody's interest, and I believe this is a case where all responsible industry players can share the objective of eliminating deceptive or abusive practices, preserving homeownership, and stabilizing housing markets.

The summit should consider best practice loan marketing, underwriting, and origination practices consistent with the recent (and overdue) regulators' Proposed Statement on Subprime Mortgage Lending. The summit participants should also evaluate options for independent loan counseling, voluntary loan restructuring, limited forbearance, and other possible workout strategies. I would also urge you to facilitate a serious conversation about the following:

* What standards investors should require of lenders, particularly with regard to verification of income and assets and the underwriting of borrowers based on fully indexed and fully amortized rates.
* How to facilitate and encourage appropriate intervention by loan servicing companies at the earliest signs of borrower difficulty.
* How to support independent community-based-organizations to provide counseling and work-out services to prevent foreclosure and preserve homeownership where practical.
* How to provide more effective information disclosure and financial education to ensure that borrowers are treated fairly and that deception is never a source of competitive advantage.
* How to adopt principles of fair competition that promote affordability, transparency, non-discrimination, genuine consumer value, and competitive returns.
* How to ensure adequate liquidity across all mortgage markets without exacerbating consumer and housing market vulnerability.

Of course, the adoption of voluntary industry reforms will not preempt government action to crack down on predatory lending practices, or to style new restrictions on subprime lending or short-term post-purchase interventions in certain cases. My colleagues on the Senate Committee on Banking, Housing and Urban Affairs have held important hearings on mortgage market turmoil and I expect the Committee will develop legislation.

Nevertheless, a consortium of industry-related service providers and public interest advocates may be able to bring quick and efficient relief to millions of at-risk homeowners and neighborhoods, even before Congress has had an opportunity to act. There is an opportunity here to bring different interests together in the best interests of American homeowners and the American economy. Please don't let this opportunity pass us by.

Sincerely,

Barack Obama
United States Senator

[anigbrowl]

1. self-kick - it's an issue thread and needs your help!

[ossman]

2. Nice

[ShortnFiery]

3. Yes, this should be covered. eom

[Cha]

4. Thanks Obama for trying to do something

about this..and thanks for bringing to our attention, anigbrowl.

[anonymeme]

7. According to the News Tonight Obama Came Up With His Solution 2 WEEKS AFTER Hillary Stated Hers...

Bet you Obamaniacs think he's responsible for putting the first men in space, and hanging the moon so they'd have some place to land, too!

[anigbrowl]

10. Well, when you come up with a link and some dates, I'll read them.

Are you sying that hillary took action on this issue in early March 2007? Let's see your information!

[Cha]

11. hilary has done this..

"Did everybody miss Hillary Clinton inserting TORT REFORM into her speech on the housing crisis?"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x5254301

[F.Gordon]

18. Both have taken action on this issue

Kudos to them for addressing this.

If the point of your post was to somehow prove that only Obama was aware of the "problem" and was the first to take action.... well..... date on this says March 15, 2007...
:shrug:

http://clinton.senate.gov/news/statements/details.cfm?id=270717&&

[anonymeme]

19. I'm Researching HRC's Plans, But Can You Tell Me How This BHO Letter Was Validated by The KOS Kids?

I Have Found a Public Statement of Policy on this in Dec 2007, but of course Obama's unknown of letter to Bernanke supposedly predates Hillary's public statement shown here:

12/6/2007
Hillary Clinton's Response to Bush Foreclosure Plan
"Throughout the foreclosure crisis President Bush has ignored the cries for help. Today he responded, but once again it's too little, too late. President Bush's plan takes the heat off the mortgage industry but leaves homeowners to sink.

"The Bush plan is designed to help as few homeowners as possible. Lenders will decide on a case-by-case basis whether a homeowner gets the rate freeze or whether she should pay the 30 to 40 percent monthly increase. These are the same lenders who made the case-by-case decisions that sum to the prospect of 2 million foreclosures. The President knows that a case-by-case approach cannot work. The case-by-case approach has resulted in only 1% of subprime loans being modified this year, and 1.8 million foreclosure notices being sent out. As recently as a few weeks ago the Treasury Secretary himself said that the case-by-case approach was inadequate. There are other crippling shortcomings. The Bush plan excludes homeowners whose mortgages reset prior to January 2008. This may sound reasonable, but it is intentionally designed to leave out the roughly 400,000 families whose mortgages are resetting this quarter. Under the Bush plan, these families will continue to experience rate resets every six months.

"America needs a plan that matches the scale of the crisis, and President Bush has failed to deliver it. But that is what happens when you are more interested in protecting corporate interests than struggling families.

"I have announced a comprehensive plan that will actually end the foreclosure crisis.

My plan imposes an immediate moratorium on foreclosures; an automatic, across-the-board rate freeze; and the requirement that servicers and lenders provide status reports on how many mortgages they are converting from designed-to-fail to designed-to-work.

The foreclosure moratorium ensures that families will not lose their homes while servicers put the systems in place to implement the rate freeze as well as the large-scale modification of loans. And the automatic, across-the-board rate freeze will ensure that hundreds of thousands of families, rather than just a few, will be spared the foreclosure process.

"I call on the mortgage industry and Wall Street to go back to the drawing board, and to do so with a commitment to helping families and not just themselves.

A voluntary agreement that fixes this problem is possible.

But if the mortgage industry and Wall Street will not shoulder their responsibility, then I will consider legislation to protect servicers and others who do the right thing by modifying loans to help families save their homes, help investors avoid losses, and help the economy."

The detailed Clinton Plan is available at: http://www.hillaryclinton.com/news/release/view/?id=4532
http://www.hillaryclinton.com/news/release/view/?id=4563

And a story published about it by Moe Bedard here:

http://loanworkout.org/2007/12/11/hillary-clintons-response-to-bush-foreclosure-plan/

Please remember that this possibly undocumented message from Barack to Ben was unknown to anyone at the time that Hillary spoke of her plan in public.

[ClayZ]

5. Put that in your economic pipe and smoke it, John McCain!

K and R

[SunsetDreams]

6. more here:

Protect Homeownership and Crack Down on Mortgage Fraud

Obama will crack down on fraudulent brokers and lenders. He will also make sure homebuyers have honest and complete information about their mortgage options, and he will give a tax credit to all middle-class homeowners.

Create a Universal Mortgage Credit: Obama will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

Ensure More Accountability in the Subprime Mortgage Industry: Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.

Mandate Accurate Loan Disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

Create Fund to Help Homeowners Avoid Foreclosures: Obama will create a fund to help people refinance their mortgages and provide comprehensive supports to innocent homeowners. The fund will be partially paid for by Obama's increased penalties on lenders who act irresponsibly and commit fraud.

Close Bankruptcy Loophole for Mortgage Companies: Obama will work to eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payments. Obama believes that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.

http://www.barackobama.com/issues/economy/#home-ownership

_________________________________________________________________________

PROTECTING HOMEOWNERSHIP & CRACKING DOWN
ON MORTGAGE FRAUD

The implosion of the subprime lending industry threatens to bring foreclosure to over two million households
nationwide, and is spreading devastating impacts to the economy as a whole. Over the past several years, while
predatory lenders were driving low-income families into financial ruin, ten of the country’s largest mortgage
lenders were spending more than $185 million lobbying Washington to let them get away with it.
Barack Obama recognizes that the real victims in the subprime mortgage crisis are not the lenders, but the
millions of borrowers who followed the rules and whose only crime was taking out mortgages that lenders told
them they could afford. Normally, these borrowers could avoid foreclosure by refinancing their mortgages or
selling their homes. Today’s borrowers lack the refinancing and selling protections that used to help out
families during a tough period. Too many families are unable to refinance because no one will lend to them,
and they are unable to sell their homes because the housing market has fallen. As president, Obama will fight to
ensure more Americans can achieve and protect the dream of home ownership.


http://www.barackobama.com/pdf/MortgageFactSheet.pdf

[grasswire]

12. how can he do these things? HOW?

The president cannot make laws. He cannot force Congress to pass laws.

He's going to be squashed simply due to naievete, apparently.

[PM7nj]

13. How is Hillary gunna get her healthcare mandate passed?

How did bush get all of his fascist bills passed?

[anigbrowl]

14. You're right. No presidential candidates should propose anything, ever.

Seriously, i guess he'll try to do it by putting appropriate measures in the budget he sends to congress, as well as encouraging congress to pass legislation on the relevant issues, same way every other president gets things done.

[grasswire]

15. in case you hadn't notice lately....

....the Republicans have changed all the rules.

[SunsetDreams]

8. forgot to say thank you :)

[anigbrowl]

9. What I like about it (besides the excellent foresight)

is that the letter takes a balanced approach towards people's interests - homeowners, brokers, lenders, and the market. Obama identifies what the problem is and suggests a pragmatic forum for addressing it before it gets to be a crisis, but without pointing fingers of blame, demanding subsidies or heavy-handed regulation, or taking a negative approach to business.

Something worth remembering (and forgotten by a lot of democrats, sadly) is that when things are running well, the banking and financial systems provide a very important service to our economy, one that has has allowed millions and millions of Americans to prosper either individually or by starting and expanding businesses. There is a perception that banks etc. don't do any concrete work, but just conjure money out of thin air and charge interest for loaning it. Hell, I feel that way about my bank sometimes. But the fact is that what financial institutions do is manage risk and act as financial guarantors of secured investments. By and large, this is a good thing.

Unfortunately, sometimes financial products are launched that turn out to be toxic, not unlike toys with lead in them or a medicine with an unforeseen side-effect, and subprime collateralised debt obligations are one such product. Obama obviously spotted this before most people and put himself on record uging the government to take action. Again, what's particularly important in my eyes is that this is a pragmatic focus on solutions and fair practice in business rather than a cheap political stunt. I strongly suspect that when it landed on the recipients' desks it was regarded as an example of Chicken Little syndrome. I bet they're wishing they'd acted on his suggestions a year back instead of flailing around trying to restore liquidity to a seized market now.

[hfojvt]

17. people on the left have been warning about the housing bubble for years

so it's not like he discovered fire, but it's still good that he got that publicly. He probably could have pushed for it a little harder too.

[meow mix]

16. not even a steamy text message?

=(