Housing Crisis Price Tag $40,000 Per Person
By Mike Colpitts
The government’s independent Office of Management and Budget estimated that the Savings and Loan Crisis cost every man, woman and child in the U.S. $10,000. The current economic crisis is much larger with at least five times the number of troubled properties. A new Housing Predictor study has determined that this financial crisis will cost each person in the U.S. at least $40,000.
Like a big turkey roasting in the oven for the holidays, the housing meltdown just can’t get finished soon enough. As markets adjust to falling home prices markets are over-whelmed with less optimism going into the New Year. Reality is finally setting in.
The shear volume of foreclosures is weighing on bankers, the Federal Housing Administration and HUD. The Treasury Department is buying up bad mortgages as securities as the Obama administrations plan moves forward.
Government figures aren’t available for exactly how many foreclosures there were during the S&L Scandal, but former RTC officials say there were in the neighborhood of 3-million properties. That makes this foreclosure epidemic at least five times the size of the S&L scandal.
It’s not hard to do the math from that point to see how staggering this economic crisis has become. The current housing crisis didn’t develop in a few short months and is going to take a lot longer to get out of and over with. Financial excess, unrestricted securities trading, Congressional failures, regulatory failures, over site panels that were regarded as a farce with bankers who made a financial killing for themselves got us into this mess.
If government leaders really cared about bringing an end to the foreclosure epidemic the crisis would be coming to an end. The government could go further into the red helping homeowners out after bailing out the banks and auto companies. But opinion polls after opinion polls all show the public doesn’t want that.
People didn’t want the banks to be bailed out either. Did that matter?
The crisis is being handled as a political football instead of as an economic disaster. Sure, there are some financial wizards tapped for their thinking, but little of real major significance is being done to repair things in the housing mess.
The Obama administration is making headlines for putting pressure on bankers as a bill to force bankers to modify mortgages sits in limbo in Congress. Foreclosures are climbing as banks move more aggressively against homeowners in default after months of delaying tactics. Instead of the crisis improving, it’s taking a turn for the worse.
Is this “The Change” we voted for?
The Obama administration set aside $75-billion under its homeowner bailout plan, known as the Home Affordable Modification Program, to provide up to four million American homeowners mortgage modifications. The administration has backed-off estimating how many homeowners can be helped from foreclosure these days as the political winds change and an election draws nearer in 2010.
Despite the daily drum beat of news stories on what the political powers are doing about the financial crisis, we haven’t seen just how much this financial piranha has added up to until now.