Democrats for Foreclosure Moratorium, Over Obama's Opposition
October 21, 2010 • 7:39AM

Several more Congressional Democrats have called on President Barack Obama to use executive authority to declare an immediate national moratorium on foreclosures, even while Obama's enthusiasm for what he calls "valid foreclosures" has become clear.

Besides Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, others who have called for a national moratorium include Rep. Alan Grayson (D-FL), Rep. Elijah Cummings (D-MD), Reps. Maxine Waters and Ted Lieu (D-CA), and in the latest call Wednesday, Rep. Barbara Lee (D-CA). It's expected that Grayson and/or others will introduce a legislative foreclosure moratorium in the "lame duck" session of Congress. Lee issued a statement, saying "I applaud the recent announcement of 40 State Attorneys General across the country calling for an investigation into the foreclosure problems facing millions of American homeowners. Their action is appropriate and timely, but does not go far enough. The Federal government has a responsibility to protect American homeowners, and I have called on President Obama in a letter last week to use his executive authority to institute a national moratorium. It's the right thing to do."

It's not the Obama thing to do, and the White House "investigative task force" formed yesterday is clearly an attempt to preempt the powers of the state attorneys general to investigate and discipline the banks over their fraudulent mortgages.

Economics Nobel Laureate Joseph Stiglitz, in a "Democracy Now" interview, supported an immediate national foreclosure moratorium and added, "There has been fraudulent activity across the board in issuing and securitizing mortgages.... It wasn't just risky lending; it was fraud. Fraudulent behavior was so common that at this point, we don't know what is a 'valid' mortgage and what is not" — a direct rebuttal of Obama's "valid foreclosures" claim.

In Illinois, Cook County Sheriff Tom Dart halted foreclosures by Bank of America, JPMorgan Chase, and Ally Financial/GMAC "until he receives assurances that they are legal." The sheriff stopped about 1,500 pending foreclosures. Dart may be in the running for Chicago mayor, against former White House chief of staff Rahm Emanuel.

The combined demands of mortgage-security investors, Fannie Mae, Freddie Mac, and the New York Federal Reserve Bank for "paybacks" on the fraudulent mortgage securities they bought from Wall Street banks, are estimated to threaten those banks with anywhere from $105 billion to $165 billion in losses — with Bank of America facing the largest losses.