Our Economy

Ms. KAPTUR. Mr. Speaker, our economy is far from healing. Economistsbelieve that the proximate cause of our economic crisis is the housingforeclosure crisis. I agree. Thus, I want to help explain how the verybanks the Executive Branch is bailing out have and continue to makemoney off our constituents through deceptive practices in the housingindustry, specifically through the sale of those mortgages.

I have a constituent in Sandusky, Ohio, who refinanced hishome due to a divorce to an adjustable rate mortgage through an Ohiobank. But then, J.P. Morgan Chase Bank in New York bought the bank andclosed the deal on the refinancing of the mortgage. Chase did notproperly disclose to this gentleman that the rates were higher thanwhat was in the original loan documents, which violates the Real EstateSettlement Procedures Act and the Truth in Lending Act.

My constituent has paid and, to the best of my knowledge,is making regular payments on his mortgage to an escrow account;however, around last October, with the help of a lawyer, he served J.P.Morgan Chase a notice of rescission on his loan due to theaforementioned violations. His lawyer requested that Chase inform himof any interested parties and holders of his mortgage to properlynotify them of his rescission. Chase has not properly answered hisquery, so the case is going to court.

It is the belief of my constituent's lawyer that Chasecannot name the holder of the mortgage. His loan was sold to a bankwhich placed his mortgage in a loan serving pool. Then his loan waschopped up into parts, bundled, and sold as mortgage-backed securitiesto hundreds of large institutional investors. Involved are trustoversight managers, depositors, underwriters, trust administrators,investors, trust fund issuing entities, trustees. But who really knowswho all are involved? But we know this: They all got a piece of the pieon the transaction.

This loan pooling process, some would say a Ponzi scheme,for securitization of loans make one's head spin. But at its core isone thing: Lots of profit on the upside, and now lots of loss on thedownside.

I do not know if my constituent can rescind his loan, avoid foreclosure, save his credit rating and, therefore, his financial future, because hecannot properly notify the holder of the mortgage. No one knows who itis.

My constituent's situation is not unique, and in fact the storyreverberates from sea to shining sea. We bailed out the banks becauseof these very practices which created certain toxic assets; yet, thepractices continue: People lose their homes, the economy is tanking,and the bailed out banks are filling their coffers, paying dividends,making acquisitions, giving bonuses, holding auctions of theseproperties.

Furthermore, I would like to call your attention and include in the Recordtoday's Wall Street Journal article titled, ``Lending Drops At Big USBanks.'' According to the article, 10 of the 13 biggest beneficiariesof bailout monies who received $148 billion of our taxpayer money sawtheir outstanding loan balances decline by a total of $46 billionbetween the third and fourth quarters of 2008. That means they weren'tmaking loans with the money they got. The intent of bailing out WallStreet by those who voted for it was to free up credit. They didn't doit. And, Federal regulators are aiding and abetting them.

Rather than using the Federal Deposit Insurance Corporationand the Securities and Exchange Commission as the proper agency formortgage resolution, what we continue to see is Treasury in charge,which is a revolving door between Wall Street and the highest levels ofour government.

Paul Volcker put out a report last week on behalf of theGroup of 13, calling for nations to reform their pro-cyclicalregulatory and accounting rules. Unless this is done, why would ourgovernment allocate one more penny of taxpayer funds to cleaning up themess that Wall Street and Washington leaders have gotten us into?