Back in 1933 there was a mortgage crisis in the US. Not only had the Great Depression ruined the economy, but people across America were facing balloon payments on mortgages that they could no longer refinance. The real estate market had gone bust along with the rest of the economy and people by the thousands faced losing their homes.
Sound familiar?
For some reason, when a similar thing happened in 2008, the response by the federal government was to give hundreds of millions of dollars to the lenders who had caused the problem in the first place. That hasn’t worked out too well for the homeowners, or the economy.
What FDR did in 1933 was create the Home Owners' Loan Corporation. The HOLC basically bought the mortgages and then the homeowners paid the HOLC. More than a million homes were saved, and when the HOLC shut down in 1951 it had actually made a profit.
I want to repeat that. A Federal agency spent money to save homes, kept over 1 million families in their homes and it made a profit for the US government.
The HOLC was not perfect, but it is something that could have been built on. Like so many other things going on today, it was all done before and we have the framework to build on if anyone really cared about the average citizen or the economy beyond Wall Street.
Obama could have proposed something similar in 2009 but he didn’t – and Congress didn’t help any. It can be done, but the people in power need the will and motivation to do it.
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