New Foreclosure Legislation Allows Homeowners to Finance Their Own Homelessness

New banking legislation means new bailouts for homeowners living in properties they can no longer afford and banks who made loans specifically to people who would not be able to afford their homes for very long. Now, everyone who did take out a conservative mortgage that they could manage will be financing the bailout of the banks and a small number of foreclosure victims.

Renters and conservative homeowners who were unwilling or unable to gamble on the real estate market over the past decade will now have to work even harder to make sure they pay their fair share of the government bailout of the banks. After hundreds of billions of dollars of inflated money already injected into the banking system by the Fed, taxpayers will now be expected to keep the Government Sponsored Enterprises afloat for a few more months as prices are manipulated upwards and private capital flees.

But after pumping the markets so full of cheap money that an artificial, unsustainable bubble was inevitable, how responsible is it for the government to keep attempting to reinflate the markets? Billions of dollars in credit lines to Fannie Mae and Freddie Mac to keep up appearances of solvency actually only hurts the average person struggling with a loan that has doubled in monthly payments on a property worth half of what it was two years ago.

Even worse, though, is the fact that rescuing these companies actually rewards the risks that the banks took during the boom years in making loans to people who had no income or ability to pay the mortgage. Instead of both homeowners and banks suffering for their poor borrowing and lending decisions, government bailouts are ensuring that banks feel less financial pain and the people experience a higher degree of economic devastation.

Inevitably, what such bailouts will lead to is more foreclosures as prices keep rising in all sectors of the economy due to the creation of hundreds of billions of dollars out of nothing. Every time the Fed injects liquidity or Congress approves more spending for one agency or another, the money is simply created out of nothing and put into an account at the Federal Reserve Bank — money which came from nothing but was created as a loan to the government by the Fed and which will need to be paid back by future revenue.

Homeowners already worried about their monthly bills will have to work even harder to pay their share of the inflation tax and keep the banking system from having to recognize its total bankruptcy. Ironically, though, it is often the individual borrowers who feel the most remorse at falling into financial difficulties; the banks, on the other hand, simply wield their political power to make sure their insolvency is paid for by the very people whose assets and communities they are financially raiding.

Catherine Austin Fitts has often talked about the “piratization” of the American economy, and the term seems to fit better with every new liquidity injection, interest rate manipulation, and federal legislation designed to protect the banks and corporations at the expense of communities. The newest legislation is just another step along the process of treating the entire American economy as the most lucrative criminal leveraged buyout in history — people financing their own homelessness.

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