There's nothing that I can add to this takedown by Elizabeth Warren. Listen as she chastises Mel Watt, the new head of Federal Housing Financy Agency, which oversees Fannie and Freddie, as to why he has not implemented principal reduction relief for millions of homeowners despite numerous studies that it is a win-win.
Senator Elizabeth Warren asks Federal Housing Finance Agency Director Mel Watt
about principal reduction for homeowners, at a Senate Banking Committee
hearing on November 19, 2014.
Excerpts:
Warren:
Another 5.3 million homeowners remain underwater... people continue to lose their homes every day...
One of the agency's duty is to implement a plan that seeks to maximize assistance for homeowners... Congress EXPLICITLY included principal reduction... as an option...
Principal reduction is often a win-win, that helps both Fannie and Freddy, and helps the family... A 2013 CBO study found that even a modest principal reduction plan could help 1.2 million underwater homeowners, prevent 43,000 defaults, and save Fannie and Freddie 2.8 billion dollars...
It has been six years since Congress created FHFA, and in all that time your agency has never, not once, permitted a family to reduce its principal... You've been in office nearly a year now, and you haven't helped a single family...
So I want to know why this has not been a priority for you? The data are there!
Watt: Uh, it has been a priority. It's just been a very difficult issue... We have to figure out a responsible way to do it...
Warren: Chairman Watt, you have had a year to do that...
It is clear why principal reduction has not been implemented, as both Warren and Watt know full well. Wall Street bankers have their hands around the throats of anyone in the administration who dares to even suggest such a plan, threatening to throttle them. The same people who brought on the foreclosure crisis in the first place, the 1% of the 1%, are the puppet masters who get to decide who gets bailed out for the good of the country (themselves), and who doesn't, because of "moral hazard."
