08-R092

2008 -- H 7376

Enacted 03/04/08

 

 

H O U S E  R E S O L U T I O N

MEMORIALIZING THE UNITED STATES CONGRESS TO TAKE EMERGENCY ACTION

TO PROTECT HOMEOWNERS AND BANKS

     

     

     Introduced By: Representatives Almeida, Fox, Diaz, Williams, and E Coderre

     Date Introduced: February 06, 2008

 

     WHEREAS, The onrushing financial crisis involving home mortgages, debt instruments

of all types and the banking system of the United States, threatens to set off an economic collapse

worse than the Great Depression of the 1930s; and

     WHEREAS, Millions of Americans, including residents of the state of Rhode Island, are

faced with foreclosure and loss of their homes over the coming months; and

     WHEREAS, The hedge funds which spread this financial collapse among markets

worldwide, by dominating speculation in all those markets, are now going bankrupt and

demanding government bailout of their securities and derivatives, and the nominal value of the

derivatives based on mortgages alone is the size of the combined GDP of the nations of the

world; and

     WHEREAS, This financial crisis threatens the integrity of both state and federally

chartered banks, as typified by the run on deposits of Countrywide Financial Corporation in

California on August 16, which could wipe out the life savings of too many American people, and

drastically undermine the economic stability of our states and cities; and

     WHEREAS, Under similar circumstances in the 1930s, President Franklin D. Roosevelt

successfully intervened to protect banks and homeowners, addressing Congress with a declaration

of national policy" on April 13, 1933, which stated "that the broad interests of the Nation require

that special safeguards should be thrown around home ownership as a guarantee of social and

economic stability, and that to protect homeowners from inequitable enforced liquidation in a

time of general distress is a proper concern of the Government"; now, therefore be it

     RESOLVED, That this House of Representatives of the State of Rhode Island and

Providence Plantations hereby calls upon the United States Congress to take emergency action in

the form of a Homeowners and Bank Protection Act of 2007, as proposed by an economist,

specifically to:

     1. Establish a federal agency to place federal and state chartered banks under protection,

freezing all existing home mortgages for a period of time, adjusting mortgage values to fair

prices, restructuring existing mortgages at appropriate interest rates, and writing off speculative

debt obligations of mortgage-backed securities, financial derivatives and other forms of financial

pyramid schemes that have brought the banking system to the point of bankruptcy;

     2. Declare a moratorium on all home foreclosures for the duration of the transitional

period, allowing families to retain their homes. Monthly payment, the equivalent of "rental

payments," shall be made to designated banks, which can use the funds as collateral for normal

lending practices, thus recapitalizing the banking system. These affordable monthly payments

will be factored into new mortgages, reflecting the orderly deflating of the housing bubble, the

establishment of appropriate property valuations, and reduced fixed mortgage interest rates.

While this shakeout may take several years to achieve, in the interim period no homeowner shall

be evicted from his or her property, and the federal and state chartered banks shall be protected,

so that they can resume their traditional functions, serving local communities, and facilitating

credit for investment in productive industries, agriculture, infrastructure, etc.;

     3. Authorize governors of the several states to assume the administrative responsibilities

for implementing the program, including the "rental" assessments to designated banks, with the

federal government providing the necessary credits and guarantees to assure the successful

transition; and be it further

     RESOLVED, That the Secretary of State be and he hereby is authorized and directed to

transmit a duly certified copy of this resolution to each member of the Rhode Island

Congressional Delegation, and also to the President of the United Stated, for immediate action.

     

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LC00602

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