Democrats to clean up the sub-prime mess

[Chimichurri]

U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.

``The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,'' Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities.

Foreclosures involving homeowners who took out subprime loans from 1998 until 2006 could cost $164 billion, Dodd said, quoting a December study by the Center for Responsible Lending in Durham, North Carolina. The government needs to provide at- risk homeowners ``forbearance or something like that to give them a chance to work through and get a new financial instrument here that they can manage financially better,'' Dodd said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1x64z58hsB4&refer=home

[Horse with no Name]

1. Yet there will be no credit given to the Democrats who pulled

folks back from the abyss.
It will just be considered more charity.
However, those words are never used when the government bails out the automakers or airlines.

[Robbien]

2. It cannot be cleaned up

We are in for a ride. The $164 Billion Dodd is talking about is just the tip of the iceberg.

Dodd's just whistling through the graveyard here.

[trumad]

3. Forget the homeowner bailout...

He better look at bailing out the mortgage brokers...

[The_Casual_Observer]

4. The bush economy was floated on the bogus mortgage scheme

for 6+ years now. That & cheap goods from china. When it all collapses they'll all be saying "How could this have happened, we could have never anticipated it!!!"

[TomInTib]

5. Don't hold your breath.

Congress knows they would be opening Pandora's box with a bailout of this size ($164B is just what is on the books at present). Once started, where would it stop?

No one wants the paper.

I feel so sorry for the poor innocents who grabbed at the ring.

[stillcool]

6. I am so wary of 'bail-outs'...

for any industry or corporation. It seems to be a matter of shifting money and perception.

[Selatius]

7. Where are we going to get the money to bail out sub-prime borrowers?

Borrow more money from China? No thank you.

[thethinker]

8. Remember that Bankruptcy Bill

that so many of our Democratic representatives voted for? Before they changed that law, a person faced with a foreclosure could shelter in Bankruptcy until they could figure out how to handle the situtation or work out some sort of settlement. Now, at least in my state, after a foreclosure is filed there isn't time to file for bankruptcy to stop the situation. They just lose the house. This is driving up the number of foreclosures.

What congress should do is pass a law to force lenders to work out lower interest rates with the borrowers who are losing their houses. The sub prime borrowers are stuck with really high interest rates compared to regular borrowers. They should have never made the mortgages to start out with, but they did. The government should just force them to take lower interest rates and work out terms the borrower can afford. There should also be a cap on the interest rate and fees credit card companies can charge.

Also, they need to rework the bankruptcy law. The original intent was to protect the public. Let the court set the interest rate or amount of the payment on an individual basis.

The government does not need to be bailing out sub prime lenders.