In what is shaping up to be the largest fiscal crisis of the new millennium and even worse than the S & L Loan scandal in the early 90s, the sub-prime mortgage crisis is going to hurt our economy on a large scale. New York City is also expected to be walloped by the situation. Overall, the city is looking at over 15,000 foreclosures and now some in the Senate are looking to act.
From The Daily News:
Schumer called for federal action against the lending practices of "really slimy mortgage brokers," which were detailed last Sunday in a special Daily News "I-Team" report.
In a 32-page study, the committee said that nationwide foreclosures were looming on 2 million homes with subprime mortgages, which are granted to borrowers whose credit histories don't rate a conventional mortgage.
The foreclosures and the spinoff effects will cost states more than $103 billion in lost property values - $9.5 billion for New York - and more than $917million in lost property taxes - more than $102 million for New York.
In the city, the borough hit hardest by the subprime crisis was Queens, where foreclosures were started on 2,478 homes through this year and another 3,561 were expected next year for a total of 6,039, the committee report said.
This national crisis will affect millions and because of the impact on the economy, everyone will eventually suffer the consequences. Why the problem was not looked into while the lending was taking place is something that should also be investigated. Of course, the Congress did not conduct any type of oversight while the Republicans were in control, whether it was regarding Iraq or our economy.
It might have been a matter of ignorance, but the fact remains that our government did nothing to stop massive predatory lending practices while interest rates were low a few years back because those mortgages being set up boosted economic figures. That economic "growth" was used by the Bush Administration to show that the economy was strong even though it was all an illusion.
And now we are going to have to pay for that mistake, as we are paying for all of Bush's mistakes.
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