The Occupy Wall Street movement has surprised virtually all experts and political pundits alike for its lasting power and growing momentum.

Cynics criticize that the movement lacks clear objectives and is fueled by “questionable” types of young people, older odd balls, and disaffected ex-military. The truth is the movement consists of an incredibly diverse population of types of Americans, all with a common theme…public policy in America has for too long favored corporations and the rich.

The OWS people are not wrong and, more than a single policy change, they seek a fundamental shift in how government works. In essence, government, in their argument, is to serve people, not business.

An example is easily found of government gone astray in this regard; our financial industry and the mortgage crisis.

After the near total collapse of our financial institutions in late 2007 and the TARP funded recovery in 2008, the premise of our political leaders was that, in order to achieve economic recovery, the country needed the financial system to recover stability.

So TARP kept the banks in business and the Federal Reserve kept them in cash and profit by flooding almost free currency into the banking system. The result? Third quarter bank results for 2011 are now in and our largest banks are reporting large profits. Also, if you care to know, our bankers in those banks are once again earning salaries and bonuses in the multi-millions.

On the other hand the housing industry remains in a death spiral that may last a decade because of the very practices that “saved” our banks.

Housing prices continue to fall because banks have made lending virtually impossible, appraisals have dropped beyond current reduced pricing, and Americans no longer have the kind of down payments now required for lending approval.

Further, fully 20 percent of homeowners now find their mortgages “upside down,” meaning they owe more than their mortgage, and sometimes significantly more than the value of their home.

It doesn’t have to be this way…banks thriving and homeowners struggling to survive. Rather the policies of our government and the Obama administration have pushed consumers off a cliff while coddling the bankers.

The problem is an obscure banking practice call “Mark to Market (MM).”

MM was a method that required banks to value their housing assets at their true and current market value. But after the 2008 recession the banks wanted rid of this requirement, because to correctly value their mortgage assets would cost banks over-stated profits, equity market reductions, and the need for greater reserves to cover losses.

So the banks lobbied the administration and congress and won a waiver of MM and replaced it with a policy called “significant judgment” where banks name a value of the assets and that becomes the accepted value.

This all means that banks do not want to write down their mortgages to real value…values that would then allow consumers to re-finance at lower rates and re-write loans for true values.

This is why the vacant home next door to you remains unoccupied and not even on the market…the bank does not want to adjust its overpriced value and lose its fake asset by selling the home at market value. It makes more banking sense to hold the house seemingly forever as an overstated asset.

Our “experts” chose saving the banks over saving the housing market … and they were wrong, for the economy can never recover until Americans once again can own homes and make payments on fair mortgages.

Congress and the Obama administration sided with big business and the rich once again rather than with consumers, and this is why the OWS movement gains adherents every week.

Until the system is fair, Americans will continue to fight for their rights and for equality.

 

Jim Crawford is a retired educator and political enthusiast living here in the Tri-State.