Ground Zero Mosque, Geitner-U.S. role in Mortgages

New York Mosque at Ground Zero
Most Americans support religious freedom; it’s one of the founding principles of our country.
But, not state sponsored religions. One of America’s deep suspicions is that America sees religion, for the most part, as personal and separate from the government.. Muslims see their government AS religion, part and parcel, fully integrated, and have little or no problem with Islamic law governing the actions of government. Unless those positions are reconciled, there is little hope of real tolerance.
In Muslim countries, those who hear of American customs and secular traditions wonder how it could be possible for religion to NOT control the state.
Fundamentalist radicals predict that one fact-tolerance to the point of submission -will be the downfall of Western and Christian societies.
Mosques have as much American Constitutional right as churches, temples, and other places of worship to exist and practice their religion.
When radical Islamic fundamentalist Imams and sheikhs take over mosques however, or plan mosques as recruitment centers for purposes other than secular integration, Americans look at the empirical evidence and wonder how far our tolerance is supposed to stretch.
I would hope that the Imam’s choice of this location is not politically-based, nor nefarious.
You can be sure of one thing; if it is built here, it will be the most infiltrated, most surveilled, most monitored mosque in the U.S.
So, in all likelihood, it will only do what it’s publicized “mission statement” purports, be a community center.

Treasury’s Tim Geithner on U.S.’s Role in Future of Mortgages

First, Geithner starts with a false premise; “the private sector’s full retreat from the mortgage market provides a compelling illustration of what would happen without some government role.”
That may be partly correct-the retreat-but the government role? They made it worse from the moment government colluded with Congress to promote “affordable housing” for those previously unable to participate.
The unconscionable compensation of Raines and others at Fannie and Freddie, the 145 Billion in losses so far, with more government “capital”demanded every month to cover continuing and rising levels of defaults, not just in mortgages insured and purchased by them, but in mortgage-backed securities of various types issued by them. Fannie and Freddie stockholders? Although trading for less than a dollar a share, any price still evidences shareholder “equity” which should have been the first to go.

There needs be no role for government in private markets, whether mortgages, financial instruments or condoms, other than transparency-enforcement through registration and audit rules, and capital requirements that place the onus of failure from bad decisions, OR marketplace corrections, on the equity owners and investors-exclusively; NO TAXPAYER BAILOUTS, LET THE FREE MARKETPLACE WORK IT’S MAGIC.
One of the real problems in the first place was housing affordability; housing priced way too high due to regulatory compliance costs, many unnecessary; land prices for the same reasons, and taxes far out of proportion to the “value” of poor services provided by state and county, if provided at all,and unwarranted demand stimulated by government-generated “housing affordability” policies.
The true need for participation by government is limited to reducing the ungodly cost of government’s role in the free marketplace. Taxes- Income, Employment, Regulatory costs, the everyday astronomical and yet still growing rapidly cost of government; unneeded, ideologically-driven social services, the costs of bureaucracy and it’s minions, and endless other costs that prevent the free marketplace from offering affordable housing.
Americans have lost the “visible horizon of personal success” that marked for so long the goal line of personal home ownership; save 10-20 percent as a down payment, find a house that met your family’s needs for space and schooling, at reasonable distances from work and leisure, and make the mental tradeoffs that allowed a qualified and willing buyer to find a willing seller and complete the transaction.
The imbalance between average middle class income and housing as a percentage or multiple of that income has never been greater.
What does that mean?
It means that the system of granting mortgages got out of whack with the credit-ability and repayment capabilities of the generation of home buyers , some 7-10 million at this point, who simply can’t afford to repay their mortgages, whose income has not kept pace with housing prices and costs of ownership, and whose market value is up to 50% less that what is owned. No wonder millions are not paying, and getting to the point of just walking away from their mortgages. Over several hundred thousand in 2009, more projected for 2010. Many are staying rent-free until they are evicted or move voluntarily, to rentals that offer as much or more-for less.
Banks say that many just kept “coming back to the well” by re-financing multiple times taking out the increases in equity for vacations, big screens, jewelry, whatever. “Those aren’t responsible homeowners, they took advantage.” To say nothing of the un-publicized criminal infiltration of the system to the tune of Billions of dollars in financing and refinancing money obtained with false documents, employment verifications by mob-front businesses, and more.
One wonders how so many home-equity loads, refinancing and so on could without the help(collusion) of the banks.
In all, the government’s role, their “impossible mission” is to force the lenders, banks, financial institutions, investors to “mark to market” their mortgages and mortgage-based securities. That may mean using the balance of bank bailout funds, including those repaid, to nationalize and re-capitalize banks that fail because of market forces.
No Boo-Hoo for investor and equity losses, but forcing the banks to generate new capital and investors at much higher levels would open the door to greater success in the future. The rebuilding process will be long and hard, but America will be better off if it re-affirms the principles of personal responsibility and freedom, and opportunity through a transparent free marketplace.
Take the losses, no matter how large ($745 Billion and up by some estimates, just for “underwaters”) Having taken the losses, rewrite the mortgages at reasonable rates reflective of the payment capability of the owners.
The market would quickly turn around. Part of the deal could be equity sharing between owners and financial institutions, wherein at some future time, part of the appreciation realized at the time of sale, say 25%, could be earned by the financial institutions for their “good faith” efforts in resolving the mess.
Having cleaned up the mess, what would be the future?
For one thing, 4-5 millions underwaters would be gone from the marketplace; demand might resume normal trends of supplying several million housing units a year just to satisfy recurring demand from new family formations.
There is a solution, even multiple solutions, but they all involve allowing the free marketplace to work, and keeping the government out of it in the future, except for insuring transparency, market-based and reality-based regulation to prevent fraud, and maintaining ownership incentives regarding tax deductions and tax offsets that have traditionally helped U.S. ownership levels, and ARE more reflective of a free marketplace.


About BarryWDennis

Solutions oriented, practical and pragmatic thinker, financially conservative, free-market enthusiast devoted to marketplace transparency.
This entry was posted in business, Congress, economy, Family and Home, finance, Obama, politics, Senate, society, Uncategorized and tagged , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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