Nearly half of all Americans who file for bankruptcy do so because of medical expenses, according to a new study released jointly by researchers at Harvard Law School and Harvard Medical School * * * "Good educations, decent jobs, and health insurance were no guarantee that a person wouldn't be wiped out by an illness or accident. We believe the current policy debates are overlooking a critical problem: A broken health care finance system is bankrupting middle class America."

"Our study is fairly shocking," explained Steffie Woolhandler, associate professor of medicine at Harvard Medical School, in an interview with the Chicago Tribune. "We found that, too often, private health insurance is an umbrella that melts in the rain."

Here is more context. $700 billion is over $2000 for every man, woman and child in America. For a family of seven, like mine, it's over $15,000. Someone just took $15,000 from me and my family, and gave it to anonymous bondholders whom I've never met, who have done nothing for me, to whom I owe nothing and -- right now -- I really don't like.

More context: you could take one percent of that amount -- one percent! -- and pay off the delinquency on every home mortgage in arrears in America. And keep people from losing their homes.

I just posted a clip Colbert Report regarding the Wall Street Meltdown on http://iflizwerequeen.com. 

CNBC's Closing Bell Anchor Maria Bartiromo is the guest.  It is not really as funny as it is revealing of the truth.  Colbert on AIG bailout:  "We are about to give an $85 billion reward to a company because managed their business poorly?"

Ms. Bartiromo's comment "a lot of people took out mortgages that they could not afford". . .  is a comment that sends me to the moon!--as if Main Street Americans are to blame for what the financial shell game sharks on Wall Street have done!  As for "bad" mortgages accounting for the Wall Street meltdown, someone needs to remind Ms. Bartiromo that many of these defaults are due to the fact that Americans have lost their jobs--not because they are some deadbeats who didn't deserve, or could not afford the loan in the first place.  Many of these "deadbeats" had to borrow against the equity in their homes to pay horrendous medical bills that either their health insurance company didn't pay and/or because they could not afford health insurance in the first place.  Others have had to borrow against the equity of their homes to cover expenses while they look for a job to replace the one they had that got shipped overseas via another trade agreement.

To listen to some of the snake oil jerks on Wall Street, you would think that this entire financial meltdown was caused because loans were made to deadbeat Americans who didn't deserve them.  This is a lie and misrepresentation of the truth of what has happened.  Futhermore, it is an insult to the American people.

Frankly, you can count me as an American who does not want to give Wall Street a stinking nickel. 

link

http://blog.franklynch.org/2008/09/08/will-everyone-who-bot-fannie-mae-stock-sue-merrill-lynch/

  http://blog.franklynch.org/ or see comment for clickable link

Republican presidential candidate Sen. John McCain’s national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show.

The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.

The median price of a home sold in March dropped by 13.3 percent compared to March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.

Both Dodd and Financial Services Chairman Barney Frank , D-Mass., plan hearings on proposals to allow the FHA to back refinanced mortgages of home owners who currently owe more than their property is worth if lenders agree to reduce the principal and write new terms that the borrower can meet.

First posted April 4, 2008 11:04 a.m.

Underwater homes would be reappraised at current market values. Under Frank's plan, homeowners would be issued new mortgages for 90% of the new value of the home, and the government would get a 5% stake to compensate for the risks it is taking. The holder of the old loanâ€"whether it is a bank or an investment pool that holds mortgage-backed securitiesâ€"would be paid 85% of the home's new value.

Doesn't that mean big losses for lenders?

Absolutely. They would have to recognize losses on underwater mortgages right away. But lenders stand to lose far more in foreclosures.

Nationally, foreclosures jumped 30 percent between the second and third quarters of 2007, according to msnbc.com, citing real-estate Web site RealtyTrac. During the three months that ended Sept. 30, foreclosures were reported on 446,000 properties, or one in every 196 U.S. households.

Forty-five states reported higher levels than a year ago. States with the highest foreclosure rates included, in order, Nevada, California, Florida, Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas. (from Lebanon, PA daily news)

South Carolina is also reporting mortgage problems especially among the African American Community.

With the Nevada caucus approaching it seems odd that no other candidate outside of John Edwards has announced a effective plan to help families that are struggling.

See the Edwards plan  http://www.johnedwards.com/issues/predatory-mortgages/

It is especially harsh considering his two main rivals in Nevada are sitting members of Congress and have the power to offer legislation, which even the President has offered to consider.

In addition to Mr. Edwards plan congress should approve a purchase fund to add liquidity to the banking system. It is clear that the Fed is stuck in its help only Wall Street mode and is unable to add anything but a band aid in the form of a tiny rate cut.

Under the Purchase fund concept the federal government could purchase up to $50 billion dollars in Loan bundles from Banks and Mortgage companies for loan up to $500,000. They would pay the Banks & Mortgage owners 75% of the value of the defaulted loan.  Banks must be able to provide ownership details.  Home owners would be given three options.

1. Have three months to sell the home at a newly decrease buyout level and get out of the loan without issue, keeping what ever equity is over the price of the loan.

2. Sign a 4 year "interest only-plus loan" at prime plus 2 or 3 points. In this case they would pay interest on the loan and a two to four hundred dollar contribution towards the principle of the loan up to 25% of their income. The new loan would bundle all past due amts and give them a 90-95% discount on the original loan.  It would give them breathing room and help build equity, while making it clear that they must begin to take responsibities seriously.
After 12 months of regular payments they would have 3 years to exercise the option of selling the home and paying off the mortgage or finding a traditional refinance product.

3. Allow the home to be foreclosed on.

These options allow homeowners a chance to recover from the predatory lending practices while not bailing them out completely.

It helps prevent a total collapse of the mortgage market by allowing banks to write of bad debt without a total loss.  They will still feel the pain of their mistakes, but the system is protected.

Additionally, it does allow housing prices the ability to fall some 30% it the market goes that way. The government should be in the business of protecting peoples homes, not the value of the home. The government should not hold up the bubble and the practices that led to it.

Any reader of The Wall Street Journal will realizes that many private equity firms are already involved in similar market based loan buyouts, but they lack the liquidity to dent the issue.

And this still leaves the banks and mortgage companies on the hook for the even riskier super mortgages over a million dollars.  But the government should focus on first homes and not get involved in the commercial market.

How would the government administer the plan, it should use the market systems and contracts with solid banks (just as mortgage companies do) to administer the loans. HUD already has expertise in handling market based programs such as these.

How would it be paid for. Well ideally the program would result in a 5 year profit for the government as housing rates stabilize, but the government could add a small federal fee (say $25 dollars per new mortgage purchase or transfer) to each new mortgage.  It would not hurt the housing market but would provide funds for the 5 year program without adding to the deficit.

Its a shame that the two sitting members of congress appear to be all talk while so many, especially in Nevada lose their homes.

The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the [Mortgage Bankers] association said. Payments are considered delinquent if they are 30 or more days past due.

The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday [TODAY]. * * * The association's survey covers more than 45 million home loans nationwide.

the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter.

Late payments [of subprime adjustable rate mortgages] jumped to a record high of 18.81 in the third quarter, up from 16.95 percent in the second quarter.

The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day. * * * I see one-third of a nation ill-housed, ill-clad, ill-nourished.

On Monday, President Bush asked for another $42 billion for war efforts on top of the $142 billion already requested for the current fiscal year, bringing the overall total for 2007-08 to nearly $200 billion. This is extra money for the war, above and beyond the Pentagon's regular budget of about $450 billion, which accounts for about a sixth of the government's overall 2007 spending of about $2.8 trillion.

Some experts say the U.S. economy can handle the spending binge without a problem.

"A half trillion dollars sounds like a pretty big number," said Jay Bryson, a global economist at Wachovia Corp. "But in a $14 trillion economy, it just isn't all that big."

Bryson said that as a percentage of the nation's overall economic output, total defense spending is just about 4 percent.

That compares with about 7 percent during the Vietnam War, 15 percent during the Korean War and 25 percent during World War II, he said.

In May, the Navy hired a Jacksonville, Fla., contractor to build concrete buildings with 525 toilets and 248 showers on an empty corner of the Guantanamo Bay, Cuba, base. The military could quickly put up tents, if needed, around the site. The buildings should be completed by next summer at a cost of $16.5 million.

Now, under the expansion outlined on Wednesday, the military is planning on paper for a second phase that would shelter another 35,000 migrants.

"The Fed on Friday chose not to cut a key interest rate, called the federal funds rate, to address the problem. That interest rate still stands at 5.25 percent. The funds rate is interest banks charge each other on overnight loans and is the Fed's main lever to influence economic activity."

"Instead, the Fed is seeking to provide reassurance to investors that the central bank will plow extra money into the U.S. financial system to make sure the credit crunch doesn't worsen."

"The Federal Reserve Bank of New York, which carries out the central bank's market operation, moved to add $19 billion in temporary reserves Friday morning. It pumped in another $16 billion in reserves a couple of hours later, then $3 billion more in the afternoon."

* * * [next paragraph out of sequence]

"The Fed's action comes one day after a financial panic about a credit crunch swept through Europe. That prompted the Europeans to pump $130 billion into their financial system. The Fed moved Thursday to add an extra $24 billion in temporary reserves to the U.S. banking system. But that wasn't enough to comfort Wall Street, which suffered its second-worst decline of the year that day."

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