Back in July I blogged about the idea that the State of California considered….Eminent Domain. The idea of Eminent Domain is that the government can take land that is not being used to its potential and reuse it for the good of the state. California argued that if they could take the massive load of foreclosed properties, through Eminent Domain, and pay the banks the fair market value of the properties, it can buoy the housing market and keep tax payers in their homes. The idea is making its way East. Josh Harkinson in the March/April 2013 issue of Mother Jones writes a wonderful article about Steven Gluckstern. The article is entitled “Take my Mortgage, Please”. Steven Gluckstern is a venture capitalist. He estimates that there are nearly three million home loans that are at or near foreclosure with 12 million borrowers owing 600 billion MORE than their home is worth. I know we have all heard about the backlog of unreported foreclosed homes, yet the numbers are quite staggering. Gluckstern is attempting to get officials in Chicago and New York (Suffolk County) to consider his plan. The plan is an echo of California’s Eminent Domain. Gluckstern is pitching that cities confiscate homes, take over loans, and bring new lenders in to refinance the loans. These new loans would reflect the real value of the property. Homeowners can afford to stay in the home and pay mortgages that could be reduced by half; homeowners will pay taxes that keep the teachers, fireman and police officers paid, private investors make money and the community rebounds. Gluckstern argues that only underwater homes would be considered by private-label securities, not the federally guaranteed ones that are difficult to modify. Sounds like a great idea so what’s the hold up? The real threats made by the big banks that they will create such crippling, expensive lawsuits against the city or state that it would push a state to the brink of bankruptcy. So much for bailing out the banks so they can push everyone else over the cliff.
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” -Thomas Jefferson