Congress continues to be firmly in the hand of money lender lobbyists. The Twenty Million dollars or more that the money lenders spent for passage of the bankruptcy bill through Congress in 2005 continues to pay dividends. A $700 billion dollar proposed payout on a $ 20Million investment, not bad for bankers who are mocked for their “stupid” investments. In 2005, Congress subjected hard working Americans, suffering the destitutes of fortune, to the rigorous requirements of Credit Counseling, Financial Management and Budgetary analysis, before they could obtain the “fresh start” of bankruptcy relief provided for by the US Constitution. Failure to meet these requirements barred them from discharging obligations owed to unscrupulous credit card lenders charging usurious interest rates and from getting out from medical bills not covered by insurance.

The Bankruptcy Bill was the worst piece of legislation that the US Congress enacted and it is the bite of that bill that is now also hurting financial institutions. The bankruptcy bill gave these financial institutions a false sense of security. They engaged in unscrupulous lending practices, charged usurious interest rates (sometimes reaching 30% per year) and reaped windfall profits from the enormous debt burdened placed on the American worker and homeowner. The enacted bankruptcy law provides no protection for homeowners from the greed of these money lenders. It obligates them to pay back all home loans (and burdensome loan costs) in full or lose the house to the lender in a foreclosure regardless of the market value of the home. In an escalating market the money lender recovered its loan, with interest, penalties and fees or acquired the property for less than market value and was then able to sell the home for additional profit.

 Pigs get fat and hogs get slaughtered. These money lenders jumped over each other in making nonsensical loans. Loan documents were forged, a borrower’s ability to pay was ignored, and teaser interest rates, for borrowers who obviously could not afford the loan, and negative amortization became the vogue. Loan brokers became creative; banks devoured these loans and regurgitated them onto investment houses. Investment houses split them up in tranches and parceled them off to exotic lands and places and wished them bon voyage on their journey around the world. While the money lenders believed that the loans had sailed off and they could live happily ever after, basic economic principles proved them wrong. These loan ships have returned burdened with algae and fish meat and now cast a poisonous odor on the American financial (fish) market.

Everyone recognizes that the problem started with subprime mortgages and that those who are really hurting are the homeowners who are losing their house. Perhaps the mistake is that what should be called a home is referred to as a house. People are losing their homes not a “house”. While a house may be something put together with bricks and intended as a shelter from the rain, a home is something real, something personal, and something near and dear. This is where the young couple decides to spend their lives. This is where the husband and the wife spend countless hours landscaping, painting, decking and shooting hoops with their children. This is where they entertain and dream of better days to come while nostalgically looking back at the time that the family spent together.

It is this loss and foreclosure of homes that must be stopped. Every home that is saved results not just in a family being prevented from being on city streets, that could turn into slum streets, it keeps hope alive and burning in the family. While a family as its home, they can still believe that by working hard they can achieve whatever they dream off. A family thrown out of their home is exactly in the same position as a refugee family of a war torn nation, thrown out and forced to live in make shift tents in the middle of unknown places. There may be but little difference between economic refugees and war refugees as both lose confidence in themselves, their country and their future. A nation’s economy cannot be built on the shoulder of refugees.

 “Homes” are what are being lost by Americans in America. The Bankruptcy law can easily be amended to prevent the egregious confiscation of American homes by lenders. A foreclosure sale of a home by a lender brings less than the market value of the home and the lender will not be repaid the debt that is owed it. The bankruptcy law must be changed to allow a homeowner to keep the house if he is able to pay the same price that the lender would receive at the foreclosure (or perhaps even pay the market price). This allows the lender to receive more than it would have in a foreclosure, keeps the homeowner in the house and stops the slide in market value of other properties as one home is taken off the market. This is a simple solution and it will work. The Bankruptcy courts are already set up and well equipped to deal with such issues.

 Even under current law they can help investors who own multiple properties (ah the poor 1%ers – they even fair better in bankruptcy courts) and modify investor loans. It is simply not equitable to deny this relief to the homeowner who only has one home. The US Economy does not need the sacrifice of this struggling homeowner and his/her family. This simple change in the Bankruptcy law is a win-win for the homeowner, the lender and the US Economy. Congress delivered the horrible Bankruptcy Law to the lobbyist in 2005. It is time for them to say “thanks, but no thanks” to further lobbying effort to prevent amendments to the Bankruptcy laws. It is also time for Democrats and Republicans to stop shedding crocodile tears for homeowners . The Banks have received billions in Bail outs – and have used the money to turn the tears of homeowners into  Mikimoto pearls for themselves.