Crisis Open Thread + Hillary’s WSJ Op-Ed Today

[This is a new open thread too.] From “Let’s Keep People In Their Homes,” Hillary Clinton’s op-ed in today’s Wall Street Journal.

It’s key because not only does Senator Clinton offer solutions, she also points out that the U.S. taxpayer can come out ahead if this is done right.

There is a broad consensus that Congress must act to stave off deeper turmoil on Wall Street. Irrespective of the final agreement yet to be reached, there are several principles that must be part of a broader reform effort that begins this week and continues in the coming months.

This is not just a financial crisis; it’s an economic crisis. Therefore, the solutions we pursue cannot simply stabilize the markets. We must also deal with the interconnected economic challenges that set the stage for this crisis — and reverse the failed policies that allowed a potential crisis to become a real one.

First, we must address the skyrocketing rates of mortgage defaults and foreclosures that have buffeted the economy and ignited the credit crisis. Two million homeowners carry mortgages worth more than their homes. They hold $3 trillion in mortgage debt. Nearly three million adjustable-rate mortgages are scheduled for a rate increase in the next two years. Another wave of foreclosures looms.

Senator Clinton proposes that we create a “Home Owners’ Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages.”

Here’s where she points out that U.S. taxpayers CAN recoup their investment in meeting this crisis:

The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We’ve got to stem the tide of failing mortgages and give the markets time to recover. …

Senator Clinton repeatedly emphasizes that taxpayers deserve not only to recoup their investments but have a right to demand an end to the reckless market situations that allowed the nation to get to this state of crisis.

The American people are bearing the risk and therefore deserve to reap the rewards of a shared equity model. And mortgage securities bought by taxpayers must be valued accurately at prices disclosed in real time, with checks and reporting requirements to prevent abuse.

Third, taxpayers are being asked to bear an unparalleled degree of financial risk. We cannot allow taxpayers to take on this burden so that Wall Street and the Bush administration can hit the “reset button.” This historic intervention demands a historic shift in priorities: an end to the broken culture on Wall Street, and the broken economic policies in Washington. …

Here’s the link to her full essay in the WSJ: “Let’s Keep People In Their Homes.”

I hope her reasoning, her ideas, and her priorities are heard today in Congress and in the White House.