Jo's Cafe

I don’t claim to know all that happened yesterday in Congress, but I think one thing needs to be done before any bail-out would work.

You must reverse the Community Reinvestment Act, signed into Law by President Jimmy Carter and put on “steroids” by President Bill Clinton, forcing mortgage brokers to give people loans by the color of their skin  and not their ability to pay it back.

When five year arms came due on mortgages to people who didn’t have a job, or a job that could support the mortgage, the crash in the neighborhoods started. 

It moved to Wall Street when banks or mortgage brokers who financed the initial loan knew that under the Jimmy Carter/Bill Clinton Socialize America Act the loans would be worthless in five years, sold them to banks or other companies.  The paper was bad.  It stunk to high heaven – but they got their money from the points, so they dumped it off on someone else.

Washed their hands of that bad paper.

Now the whole of the situation has come due – and we are broke.

The SGM and I are going to have to get use to a new bank again with the buy-out of the banking side of Wachovia by Citigroup. Interestingly enough, Citigroup also holds our mortgage.  Actually, once our mortgage was out of its three year beginning stage (we got a special deal and met all the requirements in the three year time period), it was sold to Citigroup and its been there ever since. 

So, if your mortgage is being sold from one company to the next – maybe they consider it bad paper?

This is what I do know.  Banks, businesses and the government work on credit-lines.  With the bad mortgage paper rolling around, credit is tightening up and now businesses are going to fail because they can’t get a loan to make payroll.

Wait — did read what I just wrote?  Businesses taking out loans to make payroll.

I don’t know about you, but if I took out a loan each month to pay my bills, I’d have to get a second job. 

So, let’s get rid of that nasty bill mentioned earlier and businesses, big or small need to meet payroll without a loan.

Sometimes the forest has to be burned down for new growth – stronger growth – to replace it. 

Photo Credit: Wall Street subway station. Originally uploaded to Flickr by epicharmus