Ohio Plan Shows That Bailing Out,
`Reforming' Mortgages Won't Work;
LaRouche's `Firewall' Will
Sept. 3, 2007 (EIRNS)This statement was issued today by the Lyndon LaRouche Political Action Committee (LPAC).
Days after Lyndon LaRouche's national talk calling for a nationwide freeze of mortgages, and a Federal "firewall" to protect the economy and banks from waves of millions of foreclosures, a state plan to "bail out" these mortgages instead, with state bonds, has failed. The failure of Ohio's plan to work, confirms LaRouche's warning that schemes to bail out or "refinance" mortgages now, in the midst of a global financial crisis, cannot work; they must be frozen and foreclosures banned by Congressional action.
Ohio on Sept. 2 cut its much-publicized $100 million mortgage refinancing down to just a residual plan for $25 million in bonds by the Ohio Housing Finance Agency. The agency's director, Robert Connell, said that many Ohioans facing foreclosure contacted the state for help in getting a new, fixed-rate mortgage. "However, we found that an overwhelming number of those were beyond the point at which this program could be of any help," Connell acknowledged. "The program has gone much slower than we ever anticipated.... It was not the answer." This despite marketing the program on TV, radio, and the Internet. Other states were planning to imitate Ohio's program, and New York Gov. Eliot Spitzer had announced a $100 million mortgage bailout program supposed to sell delinquent mortgages to Fannie Mae.
Mortgage interest rates have risen in the crisis, and the Ohio agency is offering replacement mortgages at 7.5% (rather than 6.75% as expected), and relatively few homeowners in trouble can qualify even for that.
Ohio had the third-highest total of U.S. foreclosure filings against properties in the first six months of 2007. Lenders sent notices of default, scheduled actions or repossessions to 44,594 properties in Ohio, according to RealtyTrac.
The Ohio program was very similar, in its proposed operation and qualifications, to the "FHA reform" scheme put out on Aug. 31 by President George W. Bush. LaRouche in his Aug. 31 talk said of that: "Now, many people are coming up with so-called reforms and legislation. Most of what I've seen is absolutely worthless junk. The most stupid thing has come from the President of the United States himself, with his proposal. We're talking about millions of evictions coming down now.
"No funny stuff, no tricks, no games. Back to basics. Think like FDR. Act immediately in the month of September. Get the Congress to pass this kind of legislation, which creates a firewall of protection of every essential chartered bank, chartered on the state or Federal level. No matter what their problems are financially, we're going to keep their doors open. And we're going to give them Federal protection."