NEW YORK, NY – October 6, 2008 – (RealEstateRama) — Senator Hillary Rodham Clinton was joined at a press conference today by economic development and housing advocates at ACCION New York and New Jersey, a microlender that serves small businesses with loans and financial counseling, to outline the next necessary steps that will help homeowners who have been hit hard by the mortgage and economic crises. Senator Clinton renewed her call for additional action to curb the current economic crisis, put in place new regulatory oversight, and enact broader economic reforms to prevent the crisis on Wall Street from impacting Main Street.
“Now Congress passed a rescue package to restore trust as well as the availability of credit, both are required for our economy to function. Now that we’ve passed a rescue package for the financial system we need a rescue plan for hardworking people in New York and America. We must tackle not just a financial crisis but a looming economic crisis. First, we must address skyrocketing mortgage defaults and foreclosures,” said Senator Clinton.
Senator Clinton outlined the steps necessary to offer relief to homeowners facing foreclosure, including her proposal for the Homeowners Mortgage Enterprise (HOME), modeled after the Great Depression-era Homeowners Loan Corporation (HOLC), to rewrite mortgages and reset terms so that creditworthy families would be able to keep their homes and make affordable payments. She has also proposed tax incentives that would help jumpstart the housing market to increase demand and inject liquidity into the credit market. Senator Clinton also detailed her proposals to pursue broader economic reform, and bring transparency to the rescue plan to safeguard the American taxpayers.
“We have to reign in executive compensation. We have to end the culture of recklessness in our financial markets. We have to end the culture of indifference in Washington. We need a new regulatory regime for the 21st century. And that will be one of my first orders of business,” said Senator Clinton. “And as the American people invest in these companies we should ask the companies to invest in the American people.”
To read more on Senator Clinton’s proposals and actions on the economic crisis, please visit http://clinton.senate.gov/issues/housing/subprime.
A transcript of Senator Clinton’s remarks is attached –
Senator Clinton: I have been a long time and enthusiastic supporter of Accion and I appreciate the work that everyone here does all the time – to provide that necessary funding for our small businesses and entrepreneurs. It is imperative that we get into this conversation about what is happening in the markets here at home and around the world; the problems and challenges of individuals, homeowners and small businesses, because if we do not start addressing their problems, we will not be able to stabilize our economy. I am here with some people who live it and work on it every single day.
You know, Accion New York and New Jersey has provided more than 10,000 loans to new Yorkers to start and expand small businesses. You’ll be meeting others who have been focused on helping. John Taylor, President and CEO of the National Community Reinvestment Coalition (NCRC). I have partnered with the NCRC and have joined with them in advocating on behalf of families caught in the net of the sub-prime mortgage crisis. Sarah Ludwig, the Co-Director of the Neighborhood Economic Development Advocacy Project. Denise Scott, Executive Director of the Local Initiative Support Corporation known as LISC. Meghan Faux, the Co-Director of the Foreclosure Prevention Project at South Brooklyn Legal Services, and Nancy Ploeger, President of the Manhattan Chamber of Commerce.
We’ve gathered this diverse group here at Accion’s offices to make sure that the press and the public know that there are those of us advocating for solutions that will really affect the factory floor, the small business office, the sales people around the kitchen table, because what we’re seeing demonstrates clearly that this credit crisis is nowhere near being resolved. Small businesses are struggling to find affordable loans to keep their inventories stocked, students are seeing student loans drying up, families are struggling to find affordable home and car loans, auto sales have declined for 11 straight months.
Governor Paterson has called a special legislative session to cut an additional two billion dollars from the state budget. New York City’s projected budget gap has been estimated at 2.3 billion dollars. This is a trend that is starting to emerge across the country. Last week Governor Schwarzenegger in California asked for a loan, in the last few days Massachusetts has asked for a loan. We have lost jobs for nine straight months. It is estimated that New York City is expected to lose more than 40,000 jobs and the rest of the state tens of thousands more.
Now Congress passed a rescue package to restore trust as well as the availability of credit, both are required for our economy to function. Now that we’ve passed a rescue package for the financial system we need a rescue plan for hardworking people in New York and America. We must tackle not just a financial crisis but a looming economic crisis. First, we must address skyrocketing mortgage defaults and foreclosures. For two years, as Gina said, I and others have called for action as wave after wave of foreclosures crashed against communities and the broader economy. In fact, I spoke before the National Community Reinvestment Coalition in March of 2007 to ring the alarm as subprime mortgage defaults skyrocketed – at the time, I gotta tell you, I was just basically blown off, that’s the nicest way of saying it, by everyone and now here we are, with a home foreclosure crisis that is increasing in intensity. The Center for Responsible Lending ranks New York fourth in the country in foreclosures.
According to the State Foreclosure Prevention Working Group the crisis is getting worse not better. The number of homeowners at risk of foreclosure, working toward loan modification is actually falling even as defaults and foreclosures continue to rise, why? Because institutions are frozen – they don’t know if they can afford to modify or rewrite they do not know what’s going to happen tomorrow, let alone next month because interest rates are dropping dramatically for everything else but a lot of the subprime rates are scheduled to reset even higher.
I am proposing the “Home Owners Mortgage Enterprise”, or “HOME” program to rewrite mortgages and reset terms so credit worthy, responsible families can keep their homes and make affordable payments. When our country enacted a similar program in the Great Depression we saved 1 million homes without costing the tax payers a dime. In fact, the program ended up with a surplus. I also believe we need a real tax credit for homebuyers to jump-start the housing market. This has been an effective tool in the past and it can be one again.
Second, we must be vigilant on behalf of taxpayers. We must put in place safeguards so that the treasury is maximizing the value of the assets purchased with your tax dollars. I want to be sure that companies don’t take undue advantage of this program and sell securities to the Treasury with one stroke of the pen and then claim a deduction for the losses on those assets with another. I want to see taxpayers have a stake in the profitability of the companies they rescue. We are taking on the risk by taking on the debt from these firms and I want to see the American people reap the upside as well. I have also proposed what I call an “E-TRUST” program. That stands for “Transparent Rules Used to Safeguard Taxpayers.” In the rescue plan, there is a provision that securities purchased by taxpayers be registered online. I want to ensure that the assets bought and sold by the Treasury department are reported online in real-time, so that the American people who are essentially buying these securities have access to our portfolio.
Third, we must pursue broader economic reform. We have to reign in executive compensation. We have to end the culture of recklessness in our financial markets. We have to end the culture of indifference in Washington. We need a new regulatory regime for the 21st century. And that will be one of my first orders of business. And as the American people invest in these companies we should ask the companies to invest in the American people. We should consider requiring financial institutions participating in this rescue plan to create an American Priorities Fund to invest in clean energy, infrastructure, mass transit, manufacturing, education, and other public goals that are served by private investment. We face serious economic times and we’ve got to take action on behalf of struggling families with the same urgency that we have seen with respect to struggling financial institutions. As we have learned in recent months, we simply can’t wait for problems to become crises.
We’ve got to not just catch our breath in these troubled economic waters, we’ve got to swim to shore, and we need all the help we can get to make sure we get there safely.