Eds. Note: Founding Editor Bob Kuttner has just released a new book, Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency. It's already receiving wide acclaim; Hendrik Hertzberg writes that it is "riveting, brilliant, and persuasive," though he neglects to mention either Bob's dashing good looks or air of mystery. In any case, Bob will be blogging about the book and on economic issues in the campaign until the election. We'll bring you those posts here on TAPPED.
The Dodd-Frank bill to brake the collapse in housing values, signed by a reluctant President Bush just three weeks ago, is already far too weak to fix what’s broken. The latest statistics are staggering. According to the firm RealtyTrac, there were 271,171 foreclosures recorded just in July. The Congressional Budget Office estimates, not disputed by Senator Dodd and Congressman Frank, project that their bill, now law, will save just 400,000 homes from foreclosure over the next three years. Two to three million mortgages are projected to default this year along.
And the problem is not just the foreclosures, but the effect on the broader housing market and on consumer purchasing power. Since most of the net worth of middle income Americans is their home equity, innocent people are being wiped out financially.
Both Frank and Dodd tried for much stronger legislation, but were stymied both by Republican resistance and by opposition from the Democrats' own Blue Dog Caucus of fiscal conservatives. Frank now says that much stronger medicine will be needed. More money to guarantee refinancings. More money for local governments and nonprofits to buy foreclosed properties, and get them re-occupied with first-time owners and renters, so that abandoned houses don't drag down property values next door and in the surrounding neighborhoods.
