by Zana Holley Dupee, Esq.
Bogin, Munns & Munns, P.A.
(352) 332-7688
The new $700 Billion bailout is codified in H.R. 1424. The official name is the Emergency Economic Stabilization Act. This new law creates a new program under which an "Office of Financial Stability" in the U.S. Treasury will purchase mortgage loans, mortgage-linked securities and other distressed assets from insurance companies, banks, securities broker/dealers and other enterprises. Under the Troubled Asset Relief Program, the Treasury Department will pay down the debt through sales of the acquired assets — which would be priced through reverse auctions — or by waiting until they reach maturity. Federal officials will have discretion to restructure assets in order to reduce foreclosures.
This bill was sold to legislators as an urgently needed bailout for our economy. But it is simply a shift of private debt to the taxpayers after the Republicans have spent 8 years shifting government assets into private hands. These are simply modern pirates looting the public treasury. When everyone wakes up from this bad dream, all our government's assets will be gone and no one will know where it all went.
Naomi Klein touches on this in her new book, The Shock Doctrine, in which she discusses how the Republicans use terror and anxiety to encourage our government to make unnecessary and rash choices which cause significant economic gain for the Republicans. Her name for this is "Disaster Capitalism" -- where the Republicans capitalize on disasters to make themselves shocking sums of money.
What does this mean for the average mortgage loan holder who can't make their payments? Nothing much, unless the government starts aggressively modifying these loans and granting forebearances for past due payments. We will see how they handle it.
