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By Rachel Goldfarb, originally published on Next New Deal

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Is Richmond’s Mortgage Seizure Scheme Even Legal? (WaPo)

Roosevelt Institute Fellow Mike Konczal looks at the questions raised by Richmond, CA's proposal to use eminent domain to reduce underwater mortgage debt. He argues that the plan has plenty of legal precedent, and clear benefits for the residents of Richmond.

Mike Konczal on Economic Collapse, Hugh MacMillan on Fracking Study (CounterSpin)

Mike appears on FAIR's weekly radio show to discuss what has and hasn't changed in the five years since Lehman Brothers's bankruptcy. He argues that the crisis really started in 2007, with the first wave of foreclosures on subprime mortgages.

This Week in Poverty: New Data, Same Story (and Same Dangerous House Republicans) (The Nation)

Greg Kaufmann sees the latest Census data on poverty as proof that even though the needed steps in the fight against poverty are known, they aren't being implemented. Unfortunately, all the policies he wants to see are anathema to the GOP.

Jackie Speier Protests Food Stamp Cuts With Steak, Vodka, Caviar (HuffPo)

Robin Wilkey reports on Rep. Speier's speech calling out her peers who favor cutting SNAP for their excessive travel bills paid by the government. But caviar and filet must come before necessities for the poor, since the $40 billion in cuts passed.

American Bile (NYT)

Robert Reich argues that Americans are divided over many issues, but their anger comes from stagnant economic growth and widening inequality. The people who see the economy as rigged against them, whether by government or business, are the angriest.

  • Roosevelt Take: Roosevelt Institute | Pipeline and Roosevelt Institute | Campus Network will join Reich for a conference call on his new film "Inequality for All" on Wednesday.

It's the Austerity, Stupid: How We Were Sold an Economy-Killing Lie (MoJo)

Kevin Drum explains how the now-infamous Reinhart and Rogoff paper on debt as a killer of economic growth kicked off the austerity regime that has reduced U.S. economic growth by as much as two percent. It's been disproved, but we're still on the austerity train.

  • Roosevelt Take: Roosevelt Institute Fellow Mike Konczal was one of the first to look at the UMass paper that disproved the Reinhart-Rogoff paper.

The Shutdown Showdown: What Happens Now? (MSNBC)

Kasie Hunt looks at the likely timeline for the continuing resolution now moving into the Senate, which contains language defunding the Affordable Care Act. It's expected that Harry Reid will strip out that language before the Senate passes the bill.

The Most Important Lesson the Fed Taught the World This Week (The Atlantic)

Zachary Karabell argues that the Fed's announcement of no taper for now is a reminder that there is no certainty in markets. There's no excuse for businesses using "uncertainty" as a reason to not hire, especially when they then blame government dysfunction.

Originally posted to Daily Kos Economics on Mon Sep 23, 2013 at 07:28 AM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Richmonds out of the box idea (4+ / 0-)

    scares the crap out of banks and their get rich quick and dirty scheme.  They will throw all the heavy artillery at Richmond to stop it.  I sincerely hope Richmond can find a way through the legal maze and make this happen.

     What a forward thinking community, they should be proud.  I for one would throw some money at supporting their effort.

    My Brothers Keeper

    by Reetz on Mon Sep 23, 2013 at 07:34:16 AM PDT

    •  Mortgage securities are generally purchased (1+ / 0-)
      Recommended by:
      johnny wurster

      for conservative investments, such as public and private pensions, retiree mutual funds, IRAs, 401k's, endowments, backing to pay claims from insurance companies, etc..

      This is not where billionaires put their money (except for rare extraordinary situations)

      Any hits the ultimate owners of these mortgages take from what happens in Richmond will be little against the rich.

      If Richmond goes ahead with this, would you be comfortable with your retirement being invested in mortgages in cities that would act similarly?  I wouldn't.

      The most important way to protect the environment is not to have more than one child.

      by nextstep on Mon Sep 23, 2013 at 08:57:38 PM PDT

      [ Parent ]

  •  Sell Your House to Pay Your Mortgage (0+ / 0-)

    The solution to an underwater mortgage is to sell your house and take the loss. You bought a house you couldn't afford, so sell it before it gets any worse for you (more interest payments, extra expenses without the budget). Move someplace you can afford.

    Most underwater mortgages were bought by people investing their money on the mistaken belief the value would increase faster than the interest and other costs. Investment mistakes can cost real money.

    If it's the banks fault, for real, sue the bank. If you can't sue the bank because it settled with the government without admitting wrong, sue the government.

    The other solutions all make me pay for your mistake or for the bank's crooked business. Why should I have to pay my mortgage every month while you don't, just because I avoided your mistake? I didn't have any insider information.

    If the solution is to claw back the $TRILLIONS from the banks that they got in the bubble, and forgive the same percentage from those funds on every single mortgage, that's a fair solution. My house cost something like 25% more than it would have if all the people getting mortgages they shouldn't have gotten hadn't gotten them and driven up prices (that's the bubble). All those underwater mortgages harmed everyone. If they're getting bailed out, I and the rest of the vast majority like me who were also harmed should get bailed out too.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Tue Sep 24, 2013 at 08:25:56 AM PDT

    •  I'm sorry, what? (0+ / 0-)

      Being underwater does not mean that you bought more house than you could afford. It means that you owe more than it currently is worth.

      If you follow the rules and put down say 15% and the market value drops 25 percent because of external factors and you are 3 years into a 30 year mortgage, how does that mean you bought more than you can afford?

      One could easily still make the payments and be underwater.

      •  The Rules (0+ / 0-)

        Yes, literally it means that your house is worth less than you paid for it. That is a problem only if you can't afford it. Otherwise there's no need for a "solution". That need for a solution in this article is what my post responds to. Read it in that spirit.

        If you can make the payments as you expected, and you don't need to sell your home during the lowest part of the market, or you just are willing to pay a lot for a place to live, you don't need a solution.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Tue Sep 24, 2013 at 04:02:22 PM PDT

        [ Parent ]

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