Here, in Nevada, we see how so many people are fighting for their American Dream. Because in so many ways, Felicitas and Francisco have lived the American Dream. Their story is not one of great wealth or privilege. Instead, it embodies the steady pursuit of simple dreams that has built this country from the bottom up.
Yet a predatory loan has turned this source of stability into an anchor of insecurity. Because a lender went for the easy buck, they are left struggling with ballooning interest rates and monthly mortgage payments. Because Washington has failed working people in this country, they are facing foreclosure, and the American Dream they sought for decades risks slipping away.
The foreclosure crisis has played out in painfully steady but predictable motion. While lenders were taking advantage of folks like Felicitas and Francisco, they were also spending hundreds of millions of dollars lobbying Washington to stay on the sidelines. For President Bush, the answer was to do nothing until the pain out on Main Street trickled up to Wall Street. Then, a few months ago, he rolled out a plan that was too little, too late. Instead of offering meaningful relief, he warned against doing too much. His main proposal for an economy that is leaving working people behind is to give more tax cuts to the wealthiest Americans, even though they don’t need them and didn’t ask for them.
I do not accept an America where Washington’s only message to working people is: “you’re on your own.”
To stabilize our housing market and to bring this crisis to an end, I’m a strong supporter of Chris Dodd and Barney Frank’s proposal to create a new FHA Housing Security Program. This will provide meaningful incentives for lenders to buy or refinance existing mortgages, and to convert them into stable 30-year fixed mortgages. This is not a windfall for borrowers – as they have to share any capital gain. It’s not a bailout for lenders or investors who gambled recklessly – as they will take losses. It asks both sides to sacrifice. It offers a responsible and fair way to help Americans who are facing foreclosure to keep their homes at rates they can afford.
There is absolutely no problem with style or lyricism in this speech. All the problems have to do with substance. It is a substance masked by excellent and eloquent rhetoric.
You'll first notice that Obama states as fact that the bank acted in a "predatory lending" manner, however he never actually says what specifically was predatory about their behavior. We are simply supposed to take this as fact and many will because most people hate banks and mortgage brokers. Furthermore, he links this nebulously lobbyists which we are also supposed to state as fact.
Obama mentions a loan that "ballooned in interest rate". Of course, the loan he is talking about is the Adjustable Rate Mortgage, and I suppose according to Obama, it is predatory lending when an ADJUSTABLE rate mortgage, ADJUSTS. Thus, he believes it is the federal government's responsibility to bail out borrowers from loan terms that are spelled out in their closing paperwork.
Then, he proposes a $10 billion fund for "victims of predatory lending". Of course, this is not only ludicrous but disingenuous. The court system already has a remedy for "victims of predatory lending". If you can prove that your lender acted in a "predatory" manner, then your entire mortgage can be erased. Why create a fund when victims can simply sue to zero out their mortgage balance. The reason is that these so called victims aren't really victims, and if they sued they would lose. Thus, rather than a fund for victims, what he will create is a $10 billion fund for bailing irresponsible folks that didn't understand or care about the terms of their loan.
Second he proclaims that he doesn't believe that America is a society that tells folks they are on their own. Of course, while that rhetoric sounds nice, it is also the hallmark of capitalism. Thus, if he rejects that, it can only mean he favors socialism or even communism.
Finally, he says he favors the Dodd/Frank plan. Of course, this may seem like a good idea to someone that knows nothing about the dynamics of mortgages, but unfortunately this diarist knows plenty. The main problem with that plan is that it inexplicably repeats the very mistakes that got us here. We got here because banks took on far too many loans with too much risk. Yet, that's exactly what Barack Obama wants FHA to do now. He wants FHA to take over the loans of these borrowers. In the politically correct world of politics, these borrowers are really just innocent victims that are really perfectly responsible, but in reality they aren't. These borrowers are irresponsible. The problem with the crisis is that loans were created for folks that should have never gotten one in the first place. The answer is NOT for FHA to give them loans they would never qualify for in the open market. By endorsing a policy where the government sets loan terms, Barack Obama takes us one step closer to socialism.
Obama claims they aren't being bailed out and rather "share in capital gain" with the bank. This is nonsense as well. Right now, these borrowers owe more than the home is worth. They have no capital to gain. The government will artificially create capital, and then tell the borrower they have to share that with the bank. If a borrower owes 250k and they can't afford the payment, the federal government will give them a new loan at a new reduced loan amount, artificially. The bank is absolutely getting a bailout. They don't want these loans, and since they owe more than the place is worth, the borrower can't refinance. The federal government is offering a way out without foreclosure. This plan is ludicrous, totally unfair to responsible folks, and frankly it will, in my estimation, bankrupt FHA within three years. Furthermore, it sets as policy that the federal government, not private business, create and set loan terms. This is yet another step towards socialism. It certainly sounds great if you have no idea about any of the dynamics of mortgages.
What Obama's plan is is nothing more than a recipe to take us one step closer to socialism. Borrowers will be bailed out rather than face the consequences of their decisions. Whenever an economy faces crisis, socialistic ideas sound all that much better. That is what Obama is playing to, but it is socialism none the less.
I notice a lot of people are finding this piece months later through google searches of Obama and socialism. Here are some other pieces linking his policies to Socialism. Here is how I compared Obama's policies to the platform of the real socialist party in America. Here is an analysis of his class warfare politics. Finally, here is a comparison between Barack Obama and Karl Marx.