The Honorable Nita Lowey:
Since the ‘Write Your Representative’ function of your web site is down, because too many people are emailing the US House of Representatives, perhaps GroundReport is a way to reach you.
I was disappointed that you voted for the bail-out. It is another example of Bush Administration incompetence. Democrats should not be sucked into supporting this massive rip-off, the way we were sucked into supporting the war in Iraq.
If you vote for the current bail-out of the banks, I am going to have to vote against you in November, even though I am a card carrying Democrat.
Instead, I would support a bail-out of the ordinary Americans who were suckered in the Greenspan housing bubble into buying homes at inflated prices with variable rate or reset mortgages that they couldn’t afford.
If you want to curry my support for a bail-out, please consider resetting home mortgages to 2002 price levels for ordinary Americans — to prices before the housing bubble was caused by “Easy Money Al” Greenspan dropping the Federal Funds rate below 2%. Some cynical partisans maintain that Mr. Greenspan, a Republican, kept the Fed Funds rate historically low, dropping it to 1% on July 16, 2003 so that George W. Bush could get re-elected in 2004.
Resetting mortgages to 2002 levels is the only way to create a bottom in the real estate market. Home prices are going to get there anyway, so the choice is between finding an immediate bottom or slowly sinking to a bottom in 2010. As of July, prices are 21% below the housing bubble peak of February 2006 so they still have 12% more to go to get back to pre-bubble levels. At the current rate of 2% per quarter, doing nothing or doing the proposed bail-out will not solve the housing problem until 2010.
Please propose a voluntary program, wherein the Government would take equity in an individual mortgage equal to the principal value of the mortgage minus the home’s value in January 2002. The homeowner would pay a fixed rate 30-year mortgage only on the 2002 value. The Government would pay cash to the bank for the difference between the current principal and 2002 price level . The cash would shore up the bank’s capital and restore liquidity in the banking system. At sale of the home, the Government would recover any value above the 2002 value plus interest. Over thirty years, the Government would get back most, if not all, of our money.