U.S. Economic/Financial News

Courts in Utah: No Foreclosures Allowed

June 9 (EIRNS)—All home foreclosures in the state of Utah by a half-dozen big banks and lenders were prohibited, in a court order issued by Fifth District Court Judge James L. Shumate on May 22.

For nearly four years, the United States has been swept by foreclosures, hundreds of thousands each month, with "servicing banks" throwing out households on behalf of "security trusts" run by international banks and claiming to have bought parts of that household's mortgage, which had once been issued by still a third "lender" or a fourth "broker" no longer in the picture. Judge Shumate acted on a lawsuit, without even holding a hearing; he apparently agreed with its arguments, that this very toxic process of "securitization" of mortgages by the banks and investment houses, forfeited both the lenders' and the securities holders' power to foreclose.

The ruling has stopped all foreclosure proceedings in the Utah by Bank of America Corp.; Recontrust Company, N.A; Home Loans Servicing, LP; Bank of America, FSB; www.envisionlawfirm.com, and other corporations. Since Band of America is the owner of the notorious Countrywide Mortgage Corp., this amounts to more than 1,000 foreclosures/month. The court order, if allowed to become permanent, will force Bank of America and other mortgage companies with home loans in Utah to adhere to laws requiring lenders to register in the state and have offices where homeowners can negotiate face-to-face with their lenders. In seeking to overturn it, the banks will argue that the states cannot touch mortgage lenders because "Federal preemption" effectively made them wards of the Federal Reserve.

States Face Killer Cuts if House Fails To Restore Medicaid Funds

June 8 (EIRNS)—If the U.S. House of Representatives does not reconsider the Jobs and Tax bill it passed before the Summer recess—which cut $24 billion in aid to states for Medicaid, the health insurance program which covers the poor and the disabled—30 states face killer budget cuts.

Governors and state legislators were caught by surprise by the House's removal of the provision for Medicaid aid to the states. Over the past ten months, the Medicaid money had been separately passed by each chamber, and President Obama had wrapped the extension into his budget proposal. But House Republicans and conservative "Blue Dog" Democrats cut it out, so as not to increase the deficit.

Gov. Ed Rendell (D) of Pennsylvania counted on $850 million in Federal Medicaid assistance. If that money is cut, he would be forced to lay off at least 20,000 government workers, including teachers and police officers. In California, Gov. Arnie Schwarzenegger's budget assumed $1.5 billion in Federal Medicaid money. California has already seen $57 billion in cuts over three years. New York, where there is no budget yet, counted on $1.1 billion in Federal Medicare money.

Many states do not have contingencies for replacing the Federal money. Some have already made severe cuts, but face Federal requirements that they maintain eligibility levels for Medicaid.