February 6, 2008 (LPAC)--The following resolution has been introduced into the Vermont House of Representatives.

Joint House Resolution

J.R.H. 49

Joint resolution urging Congress to adopt an emergency bank and homeowner protection act

Offered by: Representatives Obuchowski of Rockingham and Head of S. Burlington

Whereas, the continuing 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 are faced with foreclosure and loss of their homes over the coming months, and

Whereas, hedge funds dominating speculating in financial markets worldwide precipitated this collapse, and those markets are now facing bankruptcy and demanding government bailout of their securities and derivatives, and

Whereas, the nominal value of these mortgage-based derivatives alone equals the total gross domestic product of every nation, and

Whereas, this financial crisis threatens the integrity of both federal and state chartered banks and the run on deposits at Countrywide Financial Corporation in California on August 16, 2007 may only be the first, and

Whereas, similar bank runs at other financial institutions could wipe out the life savings of many Americans 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 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 by the Senate and House of Representatives:

That the General Assembly urges Congress to enact an emergency Homeowners and Bank Protection Act that:

1. Establishes a federal agency to: place federal and state chartered banks under federal protection, freeze existing home mortgages for a specified transitional period of time, adjust mortgage values to fair prices, restructure existing mortgages to appropriate interest rates, and write off speculative debt obligations of mortgage-backed securities, financial derivatives, and other forms of financial pyramid schemes that have nearly bankrupted the nation's financial institutions;
2. Declares a moratorium on all home foreclosures, allowing families to retain their homes during a specified transitional period;
3. Creates a system of monthly and affordable homeowner payments equivalent to rent that are payable to designated banks which can use these funds as collateral for traditional lending practices as a method to recapitalize the banking system;
4. Provides that these affordable monthly homeowner payments will be factored into new mortgages in order to: reflect the orderly deflating of the housing bubble, establish appropriate property valuations, and establish reduced fixed mortgage interest rates;
5. Provides that during a specified transitional period (which may be of several years' duration), no homeowner shall be evicted from his or her property and that federal- and state-chartered banks shall be protected in order that they can resume their traditional functions, serving local communities and facilitating credit for investment in productive entities; and
6. Authorizes state governors to assume the administrative responsibilities for implementing the program, including the "rental" payments 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 directed to send a copy of this resolution to the President and to the Vermont Congressional Delegation.