dataEvery once in a while, the voice of reason gets an ear, and this time it’s the voice of Sheila Bair.

It’s such a refreshing change to hear good people talking sense on Capitol Hill!

Kudos to Elizabeth Warren, Neil Barofsky and now FDIC chair Sheila Bair.

She’s NOT FOR SALE, and obviously has the guts to speak out:

The “too-big-to-fail concept” should be “tossed into the dustbin,” and the FDIC should have the power to close “systemically important” financial firms, Bair said in a New York speech yesterday. “Given our many years of experience resolving banks and closing them, we’re well-suited to run a new resolution program,” she said. 

The HBPA (Homeowners and Banks Protection Act) is one such potential new resolution program that can save this country from ruin, as it will also stop the run on foreclosures that has been accelerating ever since the recent expiration of Obama’s moratorium:

During the transitional period, all foreclosures shall be frozen, allowing American families to retain their homes. Monthly payments, the equivalent of rental payments, shall be made to designated banks, which can use the funds as collateral for normal banking practices, thus recapitalizing the banking systems.

The Obama moratorium, though well intended, did not take into account the fraudulent intent of these liar loans and subprime balloon mortgages which were doomed to foreclose anyway–that irresponsible decision was an acceptable risk for the CEO’s and Directors of banks like JPM, B of A and Wells Fargo, as long as the loans could be securitized, triple A’d and sold for profit.

Now these homes will sit empty, or shelter “squatters” until sold, at as low as 60% of their value. Renters who have never missed a payment will be evicted as over-extended owner/landlords default. The banks will simply cast aside the renters and open the door to more speculative opportunists to buy up the homes at a discount and wrap these into leveraged securities- it’s apparently the only thing they know how to do, shuffle paper for profit, and as long as they are left to do it, they will.

Saving Families from eviction is just one component of the HPBA–at it’s core is FDIC bankruptcy reorganization of these insolvent banks, as proven successful during the S&L crisis. Banks who are the most likely to foreclose are also the ones who engaged in fraudulent loan underwriting and therefore also most likely to come under FDIC receivership.

If you can imagine something this decent happening in America, then it can. Actually bankrupting the fraudulent loan originators, and ousting their corrupt CEOs and Board of Directors. Prosecuting the rating agency CEOs and Directors for fraud, and replacing them. Keeping struggling families and willing renters in their homes if possible, while re-evaluating the mortgage terms to reflect real property values and non-usury mortgage terms. Removing and prosecuting corrupt regulators who endorsed these securitized derivative Ponzi schemes.

That is the America we should believe in–and we should accept nothing less. We owe it to our founding fathers–as patriotic Americans, nothing less will do.

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