Saturday, January 10, 2009

BANKING Lobbyists aren't happy . . . so what?

By l.t. Dravis

WASHINGTON, D.C. – Friday, January 9, 2009 – SURPRISE, SURPRISE! Some big names in the banking lobbyist game, the American Bankers Association, the Financial Services Roundtable, the Mortgage Bankers Association, and other lobbyists aren’t happy about Citigroup’s sudden turnabout on a proposed law to give bankruptcy judges the authority to alter mortgage terms to help homeowners facing foreclosure to stay in their homes.

Without any basis in fact, these lobbyists say if Congress gives broader authority to allow bankruptcy judges to modify mortgages to help homeowners avoid foreclosures, home loans will cost more.

Why should we care what lobbyists say?

Because if we don’t head this bunch off at the pass, they’ll defeat the legislation and run up foreclosure rates higher than they are now.

So, we have to deal with them, don’t we?

Floyd Stoner, who represents himself as the American Bankers Association Executive Director for Public Policy, supposedly said, “The ABA is opposed to the agreement because it will leave in place overly broad mortgage ‘cram-down’ authority and other provisions that will harm thousands of banks across the country that have made, and continue to make good loans.”


Where does Stoner come up with the assertion that allowing bankruptcy judges to help homeowners avoid foreclosures will harm thousands of banks across the country that have made, and continue to make good loans?

Call me silly but I presume those thousands of banks across the country that made and continue to make good loans shouldn’t be too seriously impacted by bankruptcy judge decisions . . . aren’t good loans good loans?

Am I wrong to make that presumption?

In any case, let’s forget Stoner for a moment, get rid of the bank-speak, and translate this situation into plain English.

First things first: ‘Cram-down’ means that a bankruptcy judge could reduce a mortgage balance or principal or interest-rate to enable a homeowner to avoid foreclosure. For example, a bank holding a $125,000 mortgage on a property worth $100,000 could ‘cram-down’ the mortgage balance to $100,000, leaving the bank to write-off $25,000, but only if the mortgage holder proves his or her ability to pay the balance.

Banking lobbyists are too self-serving to care about the people who actually support them (the good folks who send in their mortgage payments every month and deposit money in their clients’ banks); they’d rather force mortgage holders and their families into the streets, board up properties, and further drive down overall property values.

Not too bright, huh?

Think about it . . . banks actually pay these people (the American Bankers Association, the Financial Services Roundtable, and the Mortgage Bankers Association and others) to fight legislation designed to strengthen the long-term economy, create jobs, and increase bank deposits and purchases of banking products.

Let’s go back to Floyd Stoner to get some insight into why and how banking lobbyists would be so short-sighted.

Stoner again revealed his ignorance of basic economics when he said, “Anything that is so broad, even if limited in time, is a grave concern. We always believe this economy will recover. As it does, real banks are the engine of the recovery. We need to make sure that we don’t do things that make it more difficult for them to participate in that recovery.”


‘Real banks (what are ‘real banks’?) are the engine of the recovery?

Come on!

Consumers will be the engine of the recovery!

You know who consumers are, don’t you, Floyd?

Consumers are the men and women who earn the money and the credit necessary to purchase the trillions of dollars in products and services that drive this economy year in and year out.

Consumers are the good folks who have been forced to cope with an economy turned inside out by inept, self-serving politicians who created a ten trillion dollar public debt and greedy bankers who are now begging taxpayers to bail them out of trillions of dollars in ‘toxic mortgages’.

Nearly 600,000 mortgage holders (consumers) were forced to file for bankruptcy in 2008.

About 50 million consumers hold residential mortgages today . . . representing more than $10 trillion owed to your clients.

Consumers are the folks who pay your fat salary and benefits.

So, the next time you receive a paycheck, enjoy a perk, or take a paid vacation, remember who makes it all possible.


Copyright © 2009 by LTD Associates West, Ltd. All rights reserved.

If you have questions, comments, or concerns, Email me at (goes right to my desk) and since I personally answer every Email, I look forward to hearing from you soon.



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