Escalating President Obama’s bid to help Americans holding mortgages bigger than they can repay, a powerful Senate chairman today said that banks should be told to forgive bad loans, especially for the poor.
Charging that the U.S. economy is “rigged in favor of the very rich and powerful,” Sen. Tom Harkin, chairman of the influential Health, Education, Labor and Pensions Committee, said that the federal government should work on a way to order banks to write-off part of bad loans as a way of addressing the imbalance between the rich and poor.
“Not everyone who is caught up in the housing mess bought $700,000 houses,” he told an appreciative audience at the Center for American Progress. “Many of them bought a $200,000, or a $150,000 house and they are under water. It seems to me we need a policy of some grauation of telling the banks that they are going to have to write-off some of this, especially more for the lower income,” said the chairman of the aptlyinaned HELP committee.
Obama today offered to get challenged mortgage holders easier access to refinancing, but didn’t suggest that he would order banks to write off or write down bad mortgages.
Harkin, who has led the Senate’s bid to help the middle class, said that the Feds could follow a plan used in the 1980s that helped farmers keep their land despite being unable to pay their loans.
And noting that government interest rates are virtually zero, he suggested that the government help out with loans. “You can’t have a better time than right now for the government to be involved in helping people bail out, especially low income people,” he said.
His progressive call to help homeowners came as he was also calling for a tax on stock transactions to pay for his ambitious bill to rebuild the nation’s infrastructure, expand retirement options and better the nation’s education system.
Obama, however, hasn’t signed on to his tax plan yet. It would charge a three-cent transaction on every $100 traded. He called it a “small tax,” and said it would raise $350 billion over 10 years.
“I still think that the president has got to come out for this,” Harkin said.
In cheering for the poor, Harkin railed against the GOP and Tea Party movement in his address. “Over the past year, Republicans have been pushing not just misguided budgets, but a dangerously misguided premise. Their premise is that America is poor and broke, and we can no longer afford the investments that make possible a strong middle class and a world-class economy,” he said. “I reject this premise. The United States of America remains a wealthy nation – the wealthiest in history. So one might ask: If we’re so rich, how come we’re so broke? The problem is that too much of America’s wealth has been misallocated and mis-invested,” added Harkin.
“Instead of the slash and burn approaches of the Tea Party, we need a plan and a way forward that reflects the hopes and can do spirit of the American people,” he said.
