ASSEMBLYMEMBER TED LIEU
53RD ASSEMBLY DISTRICT
For Immediate Release: November 25, 2008
Contact: Dan Okenfuss
Phone: (916) 319-2053

“It’s the Foreclosures, Stupid”

Sacramento, CA – Assemblymember Ted Lieu (D-Torrance) issued the following statement regarding the federal government’s “whopping” $800 Billion new expenditure of taxpayer funds:
           
“In addition to the US Treasury Secretary’s policy reversals and changing rationales on how to stabilize the financial system, we now have further proof that Henry Paulson has no idea what he is doing.  His statement today that ‘Nothing is more important to getting through this housing correction than the availability of affordable mortgage finance,’ is simply wrong.  The problem is not that people can’t buy homes, the problem is we can’t keep people in their homes.  In other words, ‘It’s the foreclosures, stupid.’

The colossal and continuing wave of home foreclosures caused the disintegration of numerous banks and financial institutions, destabilized the housing market, and has resulted in national and global financial chaos.  In August of this year, California experienced 101,000 foreclosure filings, which equated to about one filing every 30 seconds.  At the same time, our nation experienced about one foreclosure filing every 10 seconds.  Home loan defaults and all its consequences are causing the credit and liquidity crisis, not the other way around.  Until we solve the foreclosure problem, we will continue to have credit and liquidity issues.

AIG, Citigroup, and numerous other financial institutions are collapsing because of home loan defaults.  Yet the Treasury Secretary continues to believe that a top-down approach where we continue to throw money at Wall Street will somehow solve the problem. Using hundreds of billions of dollars of taxpayer money to buy distressed mortgage securities from Wall Street firms does nothing to help distressed homeowners stay in their homes.  None of the Treasury Secretary’s approaches are aimed at reducing home foreclosures.  That is a massive and unforgivable strategic and tactical error. 

An ancient proverb states that ‘If we don’t change the direction we are going, we will end up where we are headed.’  We are headed for economic collapse because Treasury Secretary Paulson continues to refuse to acknowledge the root cause of the crisis or do anything about it. 

It is time to listen to FDIC Chair Sheila Bair, who since last year has repeatedly identified home foreclosures as the root cause of the economic crisis.  Her policies of forcing Wall Street to accomplish home loan modifications to keep people in their homes is one of the few sensible solutions that will help our economic recovery begin.”

Assemblymember Ted W. Lieu is the author of the “California Foreclosure Prevention Act.” He represents the 53rd Assembly District, which includes El Segundo, Hermosa Beach, Manhattan Beach, Redondo Beach, Torrance, Lomita, Marina Del Rey, and portions of the City of Los Angeles.