Banks are Recovering while Foreclosures Continue to Dominate

June 25th, 2009 | Tags: Foreclosure

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The banks are recovering while foreclosed Properties continue to dominate the scene. After having received hefty sums from the government the banks are talking about repaying the money. Selling stocks and debts have proved satisfactory for the banks as they have begun to see returns on their mortgages, loan advances, increased credit card rates and refinances.

Goldman Sachs, JPMorgan as well as Morgan Stanley are indicating that they are now ready to start paying back the billions of dollars these banks had taken from the Treasury during the last couple of months.

The bad news is that foreclosures on residential houses reached record levels touching 342,000 in April. There was no improvement in the unemployment sector with it increasing to 8.9% - the highest point since 1983. Some of the communities are precariously dangling from a perch.

Rinku Sen of Applied Research Center said, “There’s an enormous impact of the foreclosure crisis and the unemployment crisis on people of color.” It is an institute dealing with public policy with a target of promoting racial justice with the help of research, journalism and by advocacy. Sen explained, “Because they were so concentrated in communities of color, the larger system didn’t pay attention. The banking system didn’t send out any red flags, and local and state officials didn’t start looking into the crisis; there wasn’t the scrutiny there should have been, given the millions of people affected.”

Many of the banks are facing legal charges filed by The National Association for the Advancement of Coloured People. The allegation is that the minorities and coloured people have been targeted with toxic loans with high interest rates and questionable terms. The irony is that it is these very banks who have been pampered with bailout money.

From bailout funds, nine jumbo banks got $125 billion. Smaller banks (586), insurers and automobile firms together got $400 billion. The government bought stocks from these banks – a deal that many experts considered to be just giveaways.

Professor emeritus Robert Hahnel of American University queried, “Is it possible taxpayers will get their money back 10 years from now? Yes, but it’s not likely. It’s clearly a massive subsidy.” Hahnel stressed that Larry Summers, one of the presidential advisors, Timothy Geithner the Treasury Secretary and Obama himself were not steering the economy in the right direction. He added, “My position is they are mismanaging this so badly they need to be fired immediately. They are putting us at terrible risk.”