The setting up of a bank that would be owned by Michigan State was proposed by Virg Bernero the Mayor of Lansing. It would advance loans with modest interest rates to business concerns and college students.

Mayor Bernero (Democrat) said that this bank would somewhat mitigate the pain of the foreclosure catastrophe by purchasing mortgage portfolios from the small banks in the state and setting up partnerships with private banks for projects aiming at economic development. Bernero stated, “Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs.”

Bernero took his inspiration from the experience of North Dakota. The Bank of North Dakota was made its debut in 1919 and is an agency for economic development. This “banker’s bank” reduces the loan risks that other private banks face and assists them to fund bigger plans. Farmers, students and business entrepreneurs avail of cheap loans from it. Most of the funds of the state are deposited with it. During the last ten years the bank was instrumental in pouring $300 million as profits into the treasury of North Dakota.
At a news conference in Michigan Bernero came forward with similar plans for Michigan. For the Democratic gubernatorial nomination he is pitted against Andy Dillon the speaker of the House and State Rep. Alma Wheeler Smith. The primary is due to be held on 3rd August. Neither Dillon nor Smith commented on the plans suggested by Bernero.

Apart from the Mayor of Lansong there are others who are keen to repeat the successful move by North Dakota. In Florida and Oregon gubernatorial candidates have made suggestions along the same lines. Legislators in Washington, Michigan and Vermont are thinking of introducing legislation that would enable the setting up of similar banks.

The Democrats in Senate in their press release said that Michigan should sell bonds, approved by voters, to set up Michigan Development Bank that would be owned by the state. Their estimate is that with a starting capitalization of $150 million the bank would be enabled to lend $1 billion to small entrepreneurs, students as well as farmers. It would also be able to offer credit card facilities charging small interest to consumers.

Winnetka has finally come under the gloom of foreclosures replete in all its fury with shadow inventories. One family exited from their foreclosed house and four days later a For Sale sign appeared. Their story reads like a novel dotted with black spots but with a miraculous happy ending.

The family comprised of two couples – the wives being sisters. They purchased their first house during the summer of 2006 by paying $634,000 for the two storey unit comprising of four bed rooms and a swimming pool. From the beginning there were signs of trouble as no down payment had been made. The loan was an ARM one or Adjustable Rate Mortgage.

Towards the close of 2008 the interest rate spiked and their monthly payments went up by double to $7,000 each month. It became beyond their means. They tried to get their loan modified and contacted their lender Wells Fargo. But the latter told them to stop making the payments and continue to stay in the house. The bank said they would be notified about when they were to exit.
It meant that the house became part of a shadow inventory for a good number of days. It is termed shadow because although the lenders seize the property they do not straightway put it in the market. The houses that are in foreclosure are also considered part of the shadow inventory.

There are no accurate figures about the number of houses hiding in shadow inventory either in this locality or across the nation. It remains unknown when these houses would enter the market.

However in this particular case the family of two sisters and their husbands finally ended with them remaining house owners. A time came when they exited from their house that had become unaffordable for them. They shifted to a new one that they had purchased in the same locality for an amount that was much less than what they had paid for the previous house four years back. The original house continues to languish with a For Sale sign.
Jobs are vanishing speedily but it is not as bad as it was one year ago; it is even better than one month previously.  In February the number of job losses was the lowest since 2006. The companies informed that they would decrease workers by 42,090 as per the findings of Challenger, Gray & Christmas Inc. In February the decrease was by 41%. In January the number of losses was 71,482. It was 77% less than the 186.350 jobs that were cut one year previously – the time of the recession peak. In January 2009 it had reached its peak with the firms announcing 241,749 cuts in jobs. Since then the numbers have steadily dropped.

Wall Street is far from happy with the political speeches pouring out of Washington. It is now making use of the right granted to it by the Supreme Court ruling while talking about money. It is going to shift more of the dollars towards the Republicans. But this poses the gains of what are the chances of Wall Street making better gains by investing with Republicans? Ultimately it might not pay off. One swallow does not mean the weather has changed and as yet it seems that the chances are slim of the Republicans coming back to power.

The most recent data is suggesting that Wall Street is continuing to bet on the Democrats but not as heavily as previously. According to The Washington Post the latest figures from Center for Responsive Politics show that previously the spending was 2:1 on Democrats. But the securities and investment group is now dividing its contributions equally between the candidates of the two parties.

The commercial banking group has always been pro-Republican and continues to remain so – comments the Washington Post. It reported that “after a brief dalliance with Democrats” the commercial banking group has given double that amount to the Republicans during the last quarter of 2009.

Why is Wall Street worried about the Democrats? The financial industry definitely dislikes steps being taken to regulate it and limit its bonus packages. But the final straw was when a proposal came forth of imposing a TARP related tax on financial entities. This was followed up later by Obama declaring that he would like to limit the size of the mega banks. An anonymous banker was quoted in The Washington Post for saying “I’m not voting for him again.”

But for the Wall Street group would the Republicans be an improvement? The conservative candidates are also endeavouring to win the favour of the voters who are furious about the bailouts and deficits in the budget. The budgetary problem has largely been because of the bailouts. The tone of the language may be the same but the essence is the same. On the other hand the Democrats are trying to be on both sides of the Wall Street fence.

Obama’s reference to the bonuses of the Wall Street banks on the one hand attracts public sympathy while on the other it is empathetic towards the plight of the bankers. Obama described the bonuses as “shameful” and “obscene” and yet he is assuring the executives that he does not “begrudge people success or wealth.”

Buying foreclosed units is not an easy but a tough job. A couple made a price offer on a house just prior to its foreclosure but it was refused. The offer was not acceptable to clear the dues of the total number of lien holders. The question being posed is would the bank be amenable to the offer or counter it?

Foreclosure numbers are at an all time high and this is resulting in more people fishing for the catch deals. But it is difficult to purchase a house at a low price then is generally believed. Most of the houses are over-encumbered with too many liens. It means the original owners have gone underwater – or the value of the house is less than the loans piled up. This problem has become very common with not only multiple loans but also accrued penalties like interests and fees. The second mortgages cause more worry. Simultaneously the value of property has dropped during the previous three years. Many of the house owners who had bought during the boom years are now upside down.

This makes it difficult to find a satisfactory deal during the 90 days prior to the foreclosure. This grace period is granted between the serving of the notice and the start of the foreclosure proceedings. One might have to inspect over one hundred units that are in pre-foreclosure before a satisfactory one can be located that has equity left to make sense of the purchasing.
When a house is put up for auction the liens are cleared and the title is clear. For instance if a house worth $300,000 is in foreclosure and has a first mortgage loan of $280,000 pending on it (inclusive of late fees and interest), a second mortgage due of $20,000 and $25,000 due on other different liens then the total loans are $325,000 while the worth of the house is $300,000.
At the auction the first lender opens the bid with an amount equal to what is owed to it. In the above example it would be $280,000. If there are no other bidders then the first lender gets the house and the other holders are left with zero; all records are erased. If there is another bid for say $300,000 then the first and second loan holders will get paid but again the others will get nothing.

Anybody wanting to out bid the loan holders would have to pay cash and here they get defeated by the investors. Hence it is no easy job to buy a house in a foreclosed auction.

According to a survey conducted by Homes & Land the majority of the realtors think that HAMP is not containing foreclosures. Only 10% think otherwise. The firm is based in Tallahassee in Florida. Thousands of realtors were asked for their opinion about the local market conditions and the results of this survey were published in its Market Pulse Survey Report.
HAMP or Home Affordable Modification Programme was launched last year by the Obama government. Its target was to assist the borrowers threatened with foreclosure by modifying their loans. It had an ambitious target but reports coming from various quarters that only a negligible number of homeowner have benefited. The banks are being accused of intentionally delaying matters while the lenders are saying that the borrowers are not producing proper papers.
In an answer to the query whether HAMP “has reduced the rate of foreclosures in your market” a mere 10% answered in the affirmative. 65% replied in the negative and 25% said they were not sure.

Eric Adair of Homes & Land said, “Unfortunately, the data on the program to date and the responses from our survey show that HAMP has done little to help. Clearly respondents to our survey don’t believe this program is helping to reduce foreclosures.”
But in spite of this lack of enthusiasm for HAMP overall there is a note of optimism. The majority of the realtors are saying that more potential buyers are showing interest. Realtors admitting of increased buyer interest were noted in Arizona (71%), California (64%) and Florida (67%). The national average was 58%.

Home & Land said that most of the interest was centering troubled properties. 14% realtors said that most of their sales over the last one year came from foreclosed units but in Arizona, California and Florida the proportion was much higher.

41% of those surveyed believe that the prices of properties have gone down and reached the bottom. 36% are not sure that it has reached the lowest point. 23% are not sure. 47% of the realtors said a mere 0% to 10% of their customers had bought a unit making use of the tax credit offer during the previous three months.

Adair commented, “Almost 5800 Realtors and agents across the United States participated in the Market Pulse Survey. We will continue ‘taking the pulse’ of as many local markets as we can throughout 2010 to better identify trends and regional market conditions.”

The foreclosure crisis is moving along. Initially it was the sub-prime borrowers but now it is reaching out to catch the prime borrowers too. Against this scenario the lives of the poorest in USA continue to be devastated by the ongoing crisis. This group comprises of the tenants living in neighbourhoods where most of the residents come from the low income category.
The scene is very common – landlords fall into foreclosure and the tenants are pushed out onto the streets with hardly any prior notice. Tenants make up 40% of the households. They are at threat from evictions because of foreclosures according to some calculations.

Last year a federal law had been enacted to step up protection against tenant evictions. But despite this, real estate developers and the lenders are continuing to worry and illegally put pressure on the tenants to get the property vacated. Never before have the tenants coming from the weaker section of society, been in greater need of legal protection. Legalities are extremely complex and sans the help of lawyers a tenant will not know about rights and how to make these effective.

Brennan Centre has recently released a report – Foreclosures: A Crisis in Legal Representation. It has been stated that the presence of a lawyer can make a critical difference in the civil disputes. It increases by ten fold the chances of an individual to stay on in the house that is his or her home. The lawyer can pressurize lenders to follow rules and this may help the extension of the stay at least. However not all the tenants can hope for this solution even with the help of a lawyer but the latter can see that eviction is done in the proper manner. The lenders need to be badly checked in their autocratic method of functioning especially in relation to the vulnerable section of society.
Unfortunately there are very few lawyers available for the poor. The latter are failing to get legal help whether it is for saving their homes or getting custody of their children. Spouses are abused with impunity. Neither can they avail of government help that is meant for them. Nearly a million people are refused who are entitled to legal help from funds granted by the federal government. This is the “justice gap” in the country.
But help seems to be near. A legislation has recently been initiated that would give more teeth to the Legal Services Corporation. The latter is a federal entity that has the authority to distribute federal funds to local legal services that are non-profit and deal with civil matters.

Lessons can be learnt from the Greek crisis to find an answer to the question as to what policy Washington should follow – austerity or taxes? Should the rich European countries condone the “profligacy” of Greece and bail it out. If Germany does this –other countries too would be encouraged to incur huge fiscal deficit and staggering government debts like Greece. The burden would then be passed on to the taxpayers of France and Germany. Thus Greece should be firmly told to follow the path of austerity and curtail its expenses so that surplus would be generated to clear its dues. This would lead to fall in living standards and unemployment; but this is the price Greece would have to pay even though the present government of social democrats is not responsible for this mess. The conservatives in the previous regime have gifted Greece with these troubles.
This it seems that like Greece, for any country with staggering debts there is only one door left open – cutting down of expenditures. The deficit is the gap between revenue and expenditure. According to economics this gap can be narrowed either by less spending or increasing taxes; there is another alternative of combing both. When the stress is laid on austerity it is assumed that taxes cannot be increased. In such a situation the only way out is to reduce expenses. The danger is that if Greece is told to be austere it would walk out of the EU.

But in USA the government is thinking of a whole swath of measures from levying taxes on bonuses and the rich. Financial deals would also be taxed. Both the Democrats and the Republicans in USA talking about austerity have allowed the piling up of huge deficits.

In 2008 when the crisis spawned by the private financial entities posed a risk to the entire financial system of the country nearly everyone became a follower of Keynes and wanted the government to increase spending. This spending termed as fiscal stimulus went to prop up the private sector rather than rejuvenate the real economy.

Many of the pundits avoid facing the truth that it is a cocktail of stepped up spending and fall in revenues that has resulted in the recession and has caused deficits right across the globe. This has contributed to the staggering increase in government debts. Consequently fiscal deficits that were til now looked upon as fiscal imperatives are now being said to be the result of fiscal “profligacy.”

Mistrust returned to the politics of America during the early months of 2009 when the opposition to Obama made the extreme among the conservationist start off its Tea Party type of protests. This attitude was dubbed as “paranoid style in American Politics” by historian Richard Hofstadter in 1960. He was moved by the rhetoric of McCarthy during the 40s and 50s seeing communist conspiracy everywhere – even within the government.

In 2009 this hyper paranoia returned when the Right wing extremists resorted to Tea Party protests. Obama had inherited utter chaos. The country was sandwiched between too fatal wars incurring huge expenditures during the last fifty years. It was in the grip of an economic heart attack with the job market bleeding because of the real estate market having come to a halt.
Despite the impressive victory of Obama the political pendulum was swinging in favour of the Right. The Democrats had handed themselves over to the bankers and the warlords. All that remained was concern for the dispossessed and how to maintain the liberal commitments of the party.

Many of the Democratic legislators (Max Baucus, Ben Nelson, Kent Conrad, Evan Bayh) could be included among the Right that has come to be termed the Blue Dogs. Obama became an icon of compromise trying to appease the bankers and the Blue Dogs. He offered changes that included little or no reforms. Some of these changes like ending torture and secret prisons were difficult to verify and have often been shown to be non-existent. Obama allowed the homosexuals to join the army but they were not given the benefits of the married. All this has not earned many laurels for Obama.

A recent report shows that among the highest 25% earners in the country the unemployment rate is 3%. For the bottom 25% earners the unemployment rate is 30%. The country is suffering from universal despair. Growth is just an illusion. The Obama team’s highest ambition as regards jobs is not so much about generating but holding the present line and not allowing any more job losses. Millions off the rolls since November 2007 has very little hope of returning.

Meanwhile the bankers have started to reward each other thanks to renewed speculation with bailout funds. This has made the taxpayers furious. Obama is trying to contain the damage by controlling the bonus payouts but nothing has been done to uproot the culture of greed that has become a habit among the elite. Obama retreated from forward action by saying, “I, like most American people don’t begrudge people success or wealth. This is part of the free-market system.”

There are a bundle of problems for America – national debt, deficits, bank speculations and downing shutters on monetization. Those walking in the corridors say something and do something else.

The credit crisis did not happen out of the blue – it was meant and planned to happen in this manner. It is difficult to swallow the argument that the Federal Reserve pushed down the interest rate to nearly zero and deluged the monetary system with cash and credit because they were stupid or not competent. They knew that the sub-prime loans did not belong to the triple A rankings but were triple B. They all were aware that the parceling of these bonds was a fraud. It was allowed to start off the credit crisis.
It is wrong to believe that only greed and stupidity drove the engine of destruction. Till only four years previously Alan Greenspan held the reins. Today it is Ben Bernanke; both men being luminaries in their field. They get reappointed and go along with the game at the best of Dark Powers of chaos.
The result is that the national debt is swelling. Dubai is said to be struggling with a debt problem of $100 billion. In reality it has gone underwater with three or four times the amount weighing it down. In the case of Dubai it is the British banks that will drown along with it.

Greece could not get any help from even Goldman Sachs. The Germans are reluctant to help although they knew from the start that Greece did not qualify to be part of the euro zone. Greece fighting with its back to the wall is demanding reparations from Germany; the latter had paid a sizeable amount to Greece in 1960 as compensation. The euro governments could do well by writing off Greece’s debts instead of subsidizing it.

Germans have wanted to come out of the euro with 71% reporting they are sick of carrying the rest on their backs with their surplus.

For the previous two months the dollar, helped by Goldman Sachs, JP Morgan Chase and Citigroup, who were well aware of the approaching Greek problem, has rallied although the insiders know that it will soon end. They were aware of the fact that IMF would declare another gold sale and this would lead to the Feds increasing the discount rate.

With Goldman controlling the Treasury and Morgan the Federal Reserve how was it possible for them not to know?

The story of 45 year old Howard Stitzel from Stetson University of Law is that of a life gone awry with foreclosure and implications in murder playing roles in his downfall. He lived larger than his life in the small town of Plant City.

At one time he practiced law with his colleague being former House Speaker Johnnie Byrd, collected funds for Republican candidates and was the member of a respected committee that was engaged in choosing judges. He constructed a spacious house (3,200 square feet), purchased a Harley-Davidson and a boat. He was a frequent traveller to Alaska and France.

But suddenly the stars went against him. He has sold his belongings including his truck and saw his house enter foreclosure. He lagged behind by $60,000 in child-support, has creditors breathing down his neck for $275,000 and was booted out of his law firm.

It was while he was sliding down that he met Dorice Moore who came to be recently charged for the murder of Abraham Shakespeare, a lottery winner of Polk County. The body was discovered within the premises of the legal office of Stitzel. Stitzel has helped in transferring assets including property of Shakespeare to the medical staffing firm of Moore.

The matter is under investigation while all the records of this legal office have been seized. His attorneys are defending his innocence and claim that Stitzel has been victimized and framed.

The teenage children of Moore and Stitzel brought them together. Stitzel had been separated from his first wife after a marriage that lasted three years. Their house in Keysville Road was foreclosed upon and a credit union reclaimed his Dodge Ram. In 2009 January he was threatened with the suspension of his driving licence because of his lagging behind in child support. This was followed by Byrd kicking him out of their law firm. Byrd complained that he was failing to turn up for work and had to fire him over the telephone. Stizel said that disagreements over business led to this situation. Byrd added that Stitzel had huge potential and what had happened was indeed sad.

Immediately after parting ways with Byrd, Stitzel started facilitating the matter of transferring assets from Shakespeare to the firm of Moore – American Medical Professionals. Moore is a Plant City local and became a close friend of Shakespeare after the latter won a jackpot of $31 million in 2006.