What's the Best Fix?

Let us take the interest paid on credit cards off our income tax like we did before Ronald Regan stopped it in the 80's. Since so many people are in debt, this would be a terrific stimulus! We take off the interest from our mortgages, why not bring back taking off the interest on credit cards?

A combination of Wall Street and Main Street greed got us where we are today. Madison Ave said we HAD to HAVE everything to make us happy and Wall Street provided the financing. All good things have to come to and end - and we now realize that we now have to pay for those toys with cheaper money. I have a suggestion to help people in dect - allow us to deduct interest paid on credit card balances off our income taxes like we did before Ronald Regan did away with it. How's that for a stimulus package? We get to deduct the interest on our mortgages, why not our credit cards?

Give the remaining $350,000,000,000.00 to all the adults (age 18 yrs +) in the US and watch us stimulate
economy. We would be happy to use the money to pay off debts, purchase houses, go on shopping sprees
and gernerally put the money back into circulation.

I???ve read probably a majority of articles and stories about the economy floating around the net, not to mention as much as I can catch on TV news and I think what bothers me the most is the attitude and the spin the media is putting on all this. First off, the media never misses an opportunity to call the current state of the economy a crisis and call for and discuss ???fixes??? for the ???financial mess??? we are in. I???m beginning to wonder if everything I have seen and read so far is not completely missing the point entirely. I have seen mention in many places, although not from the media itself, about the need to get away from credit entirely, and while I whole heartily agree, I think our situation goes much deeper than that.
What if the situation we are in doesn???t need fixing exactly. Now don???t get me wrong, people losing their homes and their jobs is definitely a major problem if not a crisis but, what if what we are going through right now IS the fix. The way I see it is, for a long time now, decades even, our entire standard of living has been pushed up and up by credit and more credit and higher and higher levels of debt both private and public. We have all been living on top of this inflated money that really isn???t there. So, to really and truly FIX the situation, society in general is going to have to get a grip on a standard of living that is probably double what we should be living. The media and our leaders are doing all of us a huge disservice by not being honest with the public. Someone will eventually have to own up to the American people that part of this situation we are in now is of their own doing and they must get out of debt completely and stay this way.
This is not going to happen. The news outlets will continue to blame evil greedy business owners who???s been employing everyone, rather than the general public and the politicians that kind of answer to them and special interest. If you want to blame someone for the current state of the economy start with the mirror then, look to the media for enabling the attitude that most of us have that we deserve money & things that we have not yet earned.

The best monetary stimulus would be raising interest rates. Consumers have stopped borrowing anyway and paying down their debt. If economists and Congressional leaders follow the money, they see that "consumers" (formerly known as "citizens") are beginning to shun personal debt, postpone discretionary spending, and more importantly to SAVE even though the economy is the worst it has been for decades. If interest rates rise as they did during the last deep, deep recession of the early 1980's, then there would be some real relief to the savers in terms of better bank savings (CD's and savings accounts) where they could build discretionary funds. Not rocket science really.

if all mortgaged home loans had ADEQUATE collateral and not backed by an artificial market this wouldn't / COULDN'T happen, That's the whole point in having an independent appraisal. To make sure the bank, the borrower, the secondary markets and the TAXPAYER is protected from unnecessary losses.

IF IT IS FEDERALLY SUBSIDIZED AND INSURED IT SHOULD BE FEDERALLY REGULATED.

This is a letter I received when trying to get help as an appraiser in Texas after being the casualty of their deregulation when an employee refuses (to commit federal banking fraud by fraudulently arriving at the "right" numbers) an assignment by the employer..

HENRY B GONZALEZ, TEXAS. CHAIRMAN
CHARLES E SCHUMER. NEW YORK

U.S. HOUSE OF REPRESENTATIVES
SUBCOMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
OF THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS
ONE HUNDRED THIRD CONGRESS B303 RAYBURN HOUSE OFFICE BUILDING WASHINGTON, DC 20515-6052 BERNARD SANDERS. VERMONT (202) 225-7054

May 18, 1994
Mr. S G
Dallas, Texas 75248

Dear Mr. G:
I am writing in response to the recent letter regarding your unfortunate experiences as an appraiser in the past few years. First of all, I commend your meritorious honesty as a certified appraiser in the state of Texas. I sympathize with you and find it a shame that the fiduciary relationship you attempted to maintain with your employers went unnoticed and unrewarded.

Unfortunately, the Congress cannot legislate honesty throughout the banking and appraisal industry. I am confident that there are many respectable banks and mortgage companies who are in great need of an appraiser with your integrity. Rest assured that I always fight to uphold the FHA guidelines and I will continue to maintain the most effective way to protect borrowers and deter unfair lending practices. Thank you for contacting me personally on this matter.

With every best wish I remain,
Henry B. Gonzalez, Chairman
---------------------------
Of course they couldn't regulate HONESTY in the industry, the PAC's and lobbyist's were paying them to de-regulate it. Again, how can something that was declared; "a serious national problem costing taxpayers billions..." by a Congressional subcommittee in 1987 still be a problem TODAY?

What works? Creating jobs. Spending money does not create jobs, but either does crooked businessmen running the show. Here' s the problem in a nut shell, say it aint so...from the book "Americans the Stupid"...the Stupid have been given a pacifer of beer, entertainment, a credit card and a promise of a trip to heaven while the leaders in government, business, religion and the media follow the philosophy of Omar the Tent Maker of TAKE THE CASH AND LET THE CREDIT GO!...

If what I heard in a report the other night is true, who and what was diving home values to such an apex.

If 70% of currant Americans are earning $50k or less and 33% earns $15k or less and the median salaries in America has basically been dormant for the past 25 years how did the median price of homes more than double?

How do people that can barely afford $80K homes drive them up to $230K?

Give a substantial stimulus package to Americans. The last payoff, $600-$1200, wasn't enough to do anything with so people put it in savings or applied the money to their ever-growing debt. Make the payment around $35,000. This will allow some to pay off credit cards with enough left over to make a purchase or two.

Well here's a suggestion - take it or leave it. The 1st bailout accomplished one thing - we haven't seen any more bank failures. But people are still panicking because homes are being lost, and now jobs are being lost. Banks, now that they are secured by the bailout, are NOT lending money because they wonder how many mortgages are going to default, and how many jobs are going to be lost. Any future fiscal/monetary stimulus should address those two issues. Obviously interest rates can't be cut any further. The gov't will have to do something to stop foreclosures - hopefully not something as drastic as a foreclosure freeze, which only delays the inevitable. If we're going to spend more taxpayer money on this, then give it to the taxpayers. Dump a bunch of money into Fannie/Freddie or whatever, for the specific purpose of refinancing home loans. Go ahead and absorb some of those mortgages, give the homeowners better rates and payments so they can keep their homes. As for jobs, I know this will sound wacko but how about offering tax rebates to companies that DON'T lay off employees? Give them a reason to keep workers, instead of trying to invent work for the unemployed. The University I work at has implemented a hiring freeze - so far no layoffs. My husband's company just laid off 40 people nationwide. He was worried and wondering if he should start looking for another job. I said "hold onto THIS job. Now is a TERRIBLE time to look for work. Those of us who have jobs need to just buckle down and ride this out. The panic has got to stop.

go to appraiserspetition.com, how can this still be a problem today?
Appraisers Petition


Concerned Real Estate Appraisers from across America
Submit the attached petition (Which was posted on ):

To: Mr. Ben Henson - Executive Director
Appraisal Subcommittee (ASC)
Federal Financial Institutions Examination Council
email:

cc: Other state or federal agencies with authority in the following matter


"The ASC's mission is to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics." From the ASC website.



The concern of this petition has to do with our "independent judgment" in performing real estate appraisals. We, the undersigned, represent a large number of licensed and certified real estate appraisers in the United States, who seek your assistance in solving a problem facing us on a daily basis. Lenders (meaning any and all of the following: banks, savings and loans, mortgage brokers, credit unions and loan officers in general; not to mention real estate agents) have individuals within their ranks, who, as a normal course of business, apply pressure on appraisers to hit or exceed a predetermined value.


This pressure comes in many forms and includes the following:


the withholding of business if we refuse to inflate values,
the withholding of business if we refuse to guarantee a predetermined value,
the withholding of business if we refuse to ignore deficiencies in the property,
refusing to pay for an appraisal that does not give them what they want,
black listing honest appraisers in order to use "rubber stamp" appraisers, etc.



We request that action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment. We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists. We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued.

(continued from Congressional sub-sommittee)

"Appraiser ineptitude, negligence, and misconduct are widespread. Of greatest concern is "client advocacy appraising, wherein large numbers of appraisers willingly agree, or otherwise succumb, to pressure brought to bear by lenders, borrowers, and others involved in the loan origination and underwriting process." (Report, p. 8.)

While appraiser ineptitude is occasionally responsible for inadequate appraisals, most abusive practices result from explicit or implicit threats against appraisers, by real estate lenders and borrowers, that their services will be discontinued if they fail to provide the "right" numbers.

Doug Barnard, Jr. Chairman
-------------------------------------------
So I simply ask, if fraudulent appraisals caused the largest taxpayer bailout in history in the 1980's how did it cause the worse "global" economic implosion ever?

House of Representatives
COMMERCE. CONSUMER. AND MONETARY AFFAIRS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING, ROOM B-377 WASHINGTON, DC 20615

August 3, 1987

This is in response to your letter of July 28 enclosing a copy of the July/August 1987 issue of Residential Valuation magazine and its editorial addressed to me entitled, "You're Barking Up the Wrong Tree". You may use this response as a reply to your editorial.

Your editorial agrees with the finding expressed in my subcommittee's report on appraisal abuses that "faulty and fraudulent real estate appraisals have become an increasingly serious national problem whose effects are widespread, pervasive and costly."

Unfortunately, the editorial distorts and thereby misstates the report's conclusions as to why real estate appraisers too often engage in shoddy appraisals.

Your editorial mistakenly attributes to our report the conclusion that abusive appraisals are due to appraisers who "are unqualified and unlicensed". We reached no such conclusion.

To the contrary, our report found that highly qualified appraisers are as often responsible for shoddy appraisals as those with less training; and that it is extreme pressures on appraisers from real estate lenders and borrowers that most often cause bad appraisals.

Even a superficial reading of the report would have found the following language:

"Responsibility for [the appraisal] problem rests with those who...base lending and related mortgage insurance/investment decisions on appraisals they know or should have known were improper or inaccurate. Equally culpable are the Federal agencies that regulate or oversee lending and mortgage insurance/investment activities and programs." (Report, p. 4.)

"Alarming numbers of lending institution officials regard appraisals as an obstacle to be overcome or a rubberstamp necessary in order to make a real estate loan under consideration. Loan officers are particularly suspect in this regard, since they are typically under explicit pressure to book as many loans as possible."

"Many lending institution officers, directors, and managers are demonstrably more interested in up-front fees and other tangible benefits accruing from a completed loan transaction, than they are with being assured that their institution's risk exposure is minimized by an accurate assessment of the actual market value of the loan's underlying collateral."
(continued)

Mr. Gross, to what end did you include your crass parenthetical aimed at Minister Steinbruck? It adds nothing of value to your piece. It clearly takes you out of any semblance of objectivity, and it marks you as just one more or the growing ranks of those using ad hominem attacks to promote their own point of view. Among the many things we should all have learned from the degradation of political discourse is the certainty that the use of vague, negative character judgements casts a brighter light on the perpetrator than on the victim. If you can't give it to us straight, at least make us wonder what your biases.are.
Disappointing.

Concerning this "global" economic implosion, has it not been blamed on "over-valued" unsecured mortgage backed securities?
Explain how "over-valued" real estate mortgages could possibly be the cause for the worse global economical implosion in history when, the very same reason was given for "the largest taxpayer bailout in history" of the banks and S/L's just 20 years ago?
There is a very simple fundamental safe-guard in place (solely) to prevent this very exact problem from ever happening (AGAIN), however, even though it is in place it was / has been rendered useless due to lobbyist, Congress and the media.
The last "great' depression was caused by greed and the lack of any regulations on the stock market and banking industry. Therefore the government went to work and created regulations that would protect the American citizens from ever having to endure another such crash.
However, the great de-regulator came along with his "trickle-down" economic plan (supported by and passed by a Democratic Congress)and within just 4 short years we were enthralled in the largest taxpayer bailout in history.
A Congressional sub-committee, investigating the problem behind the banking and S/L failures then (1980's) cited, fraudulent appraisals was the main reason for the losses.
Following is a letter from the chairman of the afore mentioned sub-committee and some of their findings.

OK, let me see if I've got this right. We have an economy that rises and falls based on what a handful of players do who are hunched over a Wall-Street craps table yelling chants across the room for good luck, while superstitions drones kiss the dice and blow on the roll for good measure. And the questions then posed are: 1) What has gone wrong with the economy? and, 2) What is the cure? If aliens ever did a 'fly by' they would have to conclude "There is no intelligent life on this planet."

OK, let me see if I've got this right. We have an economy that rises and falls based on what a handful of players do who are hunched over a Wall-Street craps table yelling chants across the room for good luck, while superstitions drones kiss the dice and blow on the roll for good measure. And the questions then posed are: 1) What has gone wrong with the economy? and, 2) What is the cure? If aliens ever did a 'fly by' they would have to conclude "There is no intelligent life on this planet."