An earlier version of this column misidentified Candace Weaver.
Bailout Needs a Bridge to Main Street
Although it's bad-mannered to crow when you've been right about something, consumer advocates, civil rights organizations and community housing groups should be shouting, "We told you so!"
The Neighborhood Assistance Corp. of America, ACORN, NeighborWorks, the Center for Responsible Lending and the National Community Reinvestment Coalition, to name a few, were screaming about the subprime mess and predatory lending practices before it became prime-time news here and around the world.
These organizations long ago predicted that a crisis in the housing market would result in a staggering increase in foreclosures and cause the largest loss of personal net worth since the Great Depression.
Now these folks are seething because the proposed bailout of financial institutions fails to include any provisions to directly help the people at the center of this crisis. To fund the bailout, $700 billion of Treasury securities would be issued to finance the purchase of troubled mortgage assets.
Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry M. Paulson Jr. have argued that we need an immediate fix to stem further market loses and can't afford any tinkering with the administration's proposal.
But Congress has to find a concrete and long-term way to help individual homeowners.
"If the taxpayers -- many of them homeowners facing foreclosure -- are going to bail out Wall Street, then they should be given the opportunity to bail themselves out as well," said Nancy Zirkin, executive vice president of the Leadership Conference on Civil Rights.
Nonprofit leaders want any bailout bill to include a provision that would give bankruptcy judges the discretion to modify primary mortgages.
"This is an effective way of providing relief to homeowners at no cost to taxpayers," AARP President Bill Novelli wrote in a letter to the leadership of the Senate Banking Committee and House Financial Services Committee.
If bankruptcy court judges could modify people's mortgages, this might give homeowners leverage to compel lenders to restructure loans or face a forced modification in bankruptcy, said Bruce Marks, chief executive of the Neighborhood Assistance Corp. of America.
Marks said Congress should completely reject Paulson's plan.
"This bill should not happen, period," Marks said.