I attend Myers/Chancellor University in Cleveland, Ohio. We have not received all of our student loan checks from the school. They flatly refuse to give any explanation and have treated us disrespectfully. They want us coming to the financial aid office every week to get pieces and parts of our money. Since the semester is over 12/20/08 and we still have not received the funds, we cannot register for next term and this creates a sad dilemma. Some of us are graduate students and will lose our credits when we transfer to another school; however, we have no choice. Money will be due for the next term, while we have not received in full the funds for this term. Who can help us? This school has gone down too far to come back.

Why doesn't someone provide incentives for students in the amount of $1,000,000--or are we not a good investment? There are no jobs in this city. What is one to do?

Saqui Agakhan

Cleveland, OH

While borrowers were taking out exotic loans to buy way more house than they could afford, I sat on the sidelines not wanting to engage in such risky behavior.

The result is that while home prices skyrocketed way beyond what the market could bear (or reasonable people could afford), I became stuck in a two-bedroom apartment with my wife and three children. I am currently waiting for prices to come back to reality.

Any bail-out would reward people for foolishly speculating in the real estate market, and punish me and my family for not exposing ourselves to the prohibitive risks. If such a bail-out occurs, the message becomes, "Do whatever you want, and Big Brother will clean up the mess after you."

If that happens, where is my bail-out? Who will help me buy a house that is $100-150,000 overpriced? Who will speak up and represent hard-working, responsible Americans who were left behind in the frenzy to buy more and more?

Barack Obama is the only Democrat who isn't speaking nonsense on this issue. Come down from your ivory towers and see what this is doing to real people!

Robert Markinson

San Diego, CA

One reason Barack Obama might not want to talk about the role of financially irresponsible bank board members in creating the subprime mortgage foreclossure financial disaster is that the national finance chair of Obama's campaign, Penny Pritzker, is a former board member of the failed Superior Bank S&L that engaged in irresponsible subprime mortgage lending during the 1990s.

According to the Encyclopedia Judaica, the Obama campaign's national finance chair, Pritzker "served as chairman of the Superior Bank from 1989 to 1994, but the savings and loan institution collapsed" in July 2001. Created at the end of 1988 as the successor bank to the failed Lyons Savings Bank, the Oakbrook Terrace/Hinsdale, Illinois-based Superior Bank was 50 percent owned by Chicago's billionaire Pritzker family. Yet according to an October 16, 2001, statement before the US Senate Committee on Banking, Housing and Urban Affairs by Ely & Company Inc. President Bert Ely, the Pritzker family's Superior Bank "started life with enormous tax benefits and a substantial amount of FSLIC-guaranteed assets under a FSLIC Assistance agreement." In a Decembe 2002 Chicago magazine article, "Tremors In The Empire," Shane Tritsch noted, for instance, that for investing $42.5 million in the failed Lyons Savings Bank before it was reopened as Superior Bank, the Pritzkers and their business partner received an estimated $645 million in federal tax credits and loan guarantees; and "by one estimate, it would have cost the government $200 million less simply to shut Lyons down."

But according to Ely's October 16, 2001, statement, "Superior's trick, or business plan" under Penny Prtizker's chairmanship was apparently "to concentrate on subprimelending, principally on home mortgages, but for a while in subprime auto lending, too," after the Pritzkers' bank acquired its wholesale mortgage organization division, Alliance Funding, in December 1992.

With a business loss estimate of between $350 million and $1 billion, the 2001 failure of the Pritzkers' Superior Bank represented the largest US-insured deposition institution to fall between 1992 and 2001. But according to a February 7, 2002, report by FDIC Inspector General Gaston Gianni Jr., "the failure of Superior Bank was directly attributable to the Bank's Board of Directors and executives ignoring sound risk management principles."

Coincidentally, the Obama presidential campaign's national finance chair was a member of the Superior Bank's board of directors which apparently ignored sound risk management principles. As the August 7, 2001, issue of the New York Times observed: "The Prtizkers controlled half the board seats. Penny Pritzker...was on the board, and Glen Miller, a top financial officer in the Pritzker organization, was chairman of the audit committee.... Penny Pritzker...was designated...to watch over the Superior investment."

Business Week also noted in a September 10, 2001, article, "The Pritzkers' Empire Trembles," that "as of July [2001]," Penny Pritzker "was still a director of the thrift's holding company, Coast-to-Coast Financial Corp."

The Superior Bank board of directors on which the Obama presidential campaign national finance chair sat "paid dividends and other financial benefits without regard to the deteriorating financial and operating condition of Superior," according to FDIC Inspector General Gianni's February 7, 2002, report. As Ely & Company Inc. President's Ely's October 16, 2001, statement observed: "Superior paid $188 million in dividends in the 1989-1999 period, which gave Superior's stockholders an 18.1 percent pretax cash return on their initial investment of $42.5 million in Superior."

Before Superior Bank's 2001 collapse, according to Ely's October 16, 2001, statement, stockholders like the Pritzker family members also "may have reaped additional profits from the substantial tax benefits the Federal Government gifted to them" when they acquired the failed Lyons Savings Bank in 1988 and created the successor Superior Bank. Between 1992 and 1998, for instance, Superior Bank claimed a federal tax credit of $10.6 million and began to pay a meaningful amount of federal income tax only in 1999.

To avoid being punished for the failure of Superior Bank, the Pritzker family agreed to pay the FDIC $460 million. Yet even with this settlement, the failure of the Superior Bank due its board's apparent mismanagement cost the federal thrift insurance agency (and US taxpayers) about $440 million.

The 1,400 Superior Bank depositors whose savings deposits in excess of $100,000 were uninsured, however, brought a federal civil racketeering suit against Penny Pritzker and other former Superior Bank officials. Not surprisingly, Business Week reported in September 2001 that "the collapsing Superior Bank, a $2.3 billion thrift that" Penny "Pritzker chaired from 1989 to 1994" was "putting the family business savvy under the klieg lights in Washington and beyond."

Less than two years after the Senate's Committee on Banking, Housing and Urban Affairs held a hearing on "The Failure of Superior Bank," former Superior Bank Chairman of the Board Pritzker began to financially back Barack Obama's 2004 campaign to become a U.S. Senator from Illinois. As David Mendell recalled in his 2007 book Obama: From Promise To Power:

Obama was confident that he was destined for more than a day job running a foundation or practicing law or languishing in the minority party in the Illinois senate.... He invited a group of African-American professionals to the house of Marty Nesbitt, who had served as finance chairman of his congressional campaign. Nesbitt is...vice-president of the Pritzker Realty Group, part of the Pritzker family empire.... Nesbitt arranged a weekend gathering to help Obama reach inside the deepest pockets he knew--those of the Pritzker family...
 ...Nesbitt knew that if Obama could sell himself to Penny Pritzker, her support would not only reap huge immediate financial dividends but also be a crucial step in the foundation of a fund-raising network.
 So in late summer 2002, Obama, Michelle [Robinson-Obama] and their two daughters drove to Penny Pritzker's weekend cottage along the lakefront in Michigan about forty-five minutes from Chicago...[/blockquote>

Given the past involvement on the board of a failed savings bank that engaged in financially reckless subprime lending of the 2008 Obama presidential campaign's national finance chair, it's not surprising that Max Fraser reports that "only Obama has not called for a moratorium and interest-rate freeze;" and that Josh Bivens of the Economic Policy Institute said that "there's been less emphasis from the Obama campaign on the really dysfunctional role of the financial industy in the subprime mess."

Incidentally, former Superior Bank Chairman Penny Pritzker contributed $100,000 to the Democratic National Committee [DNC] in 2000.

Bob Feldman

Boston, MA

02/11/2008 @ 1:59pm

Like so many experts, the author fails to recognize the currency implications of the solution he proposes. Such massive increased borrowing will not, as in the '30s, be a purely domestic affair, withdrawing funds from the private economy to be redirected under governmental management. A massive government program these days will mean signing giant IOUs to China, the Middle East and Russia.

Now that the euro has given the world an alternative safe haven, the unthinkable--a true dollar currency crisis--is becoming ever more thinkable. Such unbridled debt will hasten its day.

Having lived through the '98 Russian currency crisis on the ground, I can assure readers that a real currency crisis will be wrenchingly painful, far more so than the current discomforts for hypersensitive American hyperconsumers.

We Omahans (pardon me aligning myself with our far-seeing and progressive Oracle) have largely dropped the dollar already. The fundamentals speak to the inevitibility of a currency crisis, and it would certainly seem that the hands are now finally visibly reaching midnight.

All is not bleak. The good news is that an import shock would do wonders for our domestic manufacturing and services industries, as well as stunting the still-powerful latent hegemonistic drives that still largely determine our foreign policy.

Perhaps even more important, there could be serious carbon-reduction and other green implications.

And for us progressives, better it come before November rather than later. And best our candidate not be seen to have been another overly enthusiastic cheerleader for a last round of the consumerist spending spree.

Tom Fennell

Omaha, NE

Young people are priced out of the market because home prices are at historically high multiples of incomes even after the recent corrections. Also, most young folks' incomes are lower then established baby boomers. Furthermore, most boomers bought before the recent run-up so they have been building equity for decades with a big stake pinned to the run-up in value. These older folks with pre-bubble equity are OK as long as they did not cash out refinance to get that new Lincoln Navigator.

On the other hand, the laws of economics have not changed. Young first-time buyers cannot afford a mortgage for an amount eight to ten times their yearly income. If you get an interest-only balloon ARM, you can pretend to afford it for a couple years, like the folks who are in trouble now were doing. But that's a fool's paradise, and anyway they aren't giving those out anymore. It's the traditional 20 percent down with fixed rate loans from now on, and that means we have to return to the historical definitions of affordable, i.e., you can only afford up to four or maybe five times your yearly income. Do the math--interest rates going lower doesn't make a home at eight times your salary more affordable--you still can't afford it. Unless interest rates go negative. Really far negative.

ARM rate freezes, foreclosure moratoriums, GSE loan limit increases and borrower bailouts are all attempts to create price supports at the current, anomalously high price multiples. Lets leave aside whether these schemes to prop up values will work (I happen to think they will be expensive failures because we just can't afford to inject enough money). Can someone explain to me how it is progressive for the government to intervene on behalf of the haves (the landed gentry) at the expense of the have-nots (young folks with no equity who are "priced out of the market")?

Obama's core constituency is people under 30. Those folks, if they want to vote in their own economic interest, ought to consider someone willing to let housing come back to a price first-time buyers can afford. Since I am not a Republican, I vote my economic interest, I'd sure like to buy my first house. If this makes Obama and me "centrists" because of a superficial laisssez-faire appearance, I can live with that. But I still contend the long-term effect is progressive if it prevents a stratification of society into a landed class and a class with no hope to ever catch up to government-backed home prices.

Thomas Ellis

Santa Barbara, CA

The Democrats are all wrong on the foreclosure issue. What they should do is tell the home buyers to walk away if they can't afford the house, can't afford the loan. By halting foreclosures and freezing interest rates for a few months, the Democrats are only holding off the inevitable financial disaster until a Democrat takes office. How stupid can they be?

Here's how it works. When people buy a home, they only ask how much it will cost per month. That is the critical number. That is how people decide whether or not they can afford to buy. Greenspan held down interest rates to obscenely low levels. That meant real estate developers could jack up the actual sales price of the home, since people could afford to borrow more money with the low interest rates. People end up paying twice as much for a home because interest rates are so low. Banks get to make huge loans. Brokers get to make huge commissions.

What does the homeowner get? A house that costs three times what it would have cost ten years ago. And an adjustable mortgage, interest-only, with a balloon, often based on lies about income and assets. When interest goes back up to a more realistic level, the property will go into foreclosure.

People bought homes at grossly inflated prices, which they could not afford, and took out loans for which they did not really qualify. As of today, they have no equity. With the tax breaks given to them, most of these home-buyers have paid less to "buy" than they would have paid to rent. The only tragedy here for the home-buyers is that they bought houses at grossly inflated prices that they could not afford, and now they need to get out.

Let's say a loan for $500,000. Foreclosure. Property sells for maybe 20 percent reduction at $400,000. Bank takes the $100,000 loss, which is as it should be.

The Democrats are telling people to keep paying their mortgage no matter what. Get a forty-year, fifty-year mortgage. Where we are headed is that everyone will "buy" a home but never own it because the loans will go on forever.

Walk away, folks, and let the price of housing fall. Let the banks take the loss. And get the lazy corrupt politicians to reinstate laws requiring people to put down a reasonable down payment and submit verified information of ability to pay.

Nancy A. Butterfield

Camarillo, CA

Max Fraser's analysis in this article is fundamentally flawed.

First, he suggests that Obama is receiving financial industry support because "employees" of certain financial institutions contributed to his campaign. We all saw the movie SICKO, and saw the thousands of letters Michael Moore received from employees in the healthcare industry who adamantly disagreed with the policies of their employers. Unless you have "hard evidence" that some employer told their employees to give to Obama, this amounts to an Obama smear!

And on the substantive point about the subprime crises and across-the-board freezes of interest rates and foreclosures, Fraser fails to consider the destructive impact real estate speculators had on the affordability of housing. These speculators accounted for more than half of all home buyers in the final years of the real estate bubble, and it was their speculating that put home prices out of reach for many Americans.

Because subprime No-Income-Qualifier loans with the lower interest rates allowed these speculators to flip more houses, they were the instrument of choice, as buyers believed they could resell their houses before the interest rates re-set. Therefore, lumping these speculators into the same category as the poor who were taken advantage of by callous lenders is not very sound public policy, and certainly is not very progressive on the housing affordability issue.

Obama is way out in front in recognizing that the one-size-fits-all freezes unfairly helps out this class of speculative real estate buyers by rewarding them for lying about their incomes on their loan applications. Rewarding this dishonesty, calculated risk-taking and housing price distortions is wrong, and Hillary Clinton should be ashamed for supporting this scheme at the expense of the poor and the middle class who must now rent because they can no longer afford to buy.

Metteyya Brahmana

Santa Cruz, CA

With a record 2.2 million foreclosures in 2007, and a staggering 5 million estimated for 2008, we face a serious social and economic crisis that threatens millions of American men, women and children.

As a candidate for the US Senate from Maine, I have been calling for a five-year nationwide freeze on all foreclosures (homes, farms, factories, hospitals, utilities and infrastructure) since last October, and have urged the presidential candidates to join me.

The real "moral hazard" is putting the interests of greedy Wall Street speculators above those of American families who face losing their homes. Sadly, Sen. Obama epitomizes such a "moral hazard" by not confronting the crisis.

Wall Street needs to take its bitter "free market medicine." No taxpayer money should be squandered bailing out greedy speculators or feeding the derivatives black hole that's pulling us toward a hyper-inflationary depression and war. We must federalize the Federal Reserve and institute monetary reform so that public and private sector investment strategies don't cannibalize companies and loot hard-earned pensions. Instead they should build solidity and true wealth for all participants, not just those at the top of the organization chart.

Our moral fiber and conscience are being tested in these difficult times. We face war, an executive branch that should have been impeached five years ago, and now a Bush depression threatening to displace millions from their homes. This is why I'm running for the Senate. Having the courage to face down the powerful will ensure a decent future for our children. We the people are in deep trouble, but if we support one another we can and must triumph. The real "moral hazard" is what happens if we do not.

Laurie Dobson
http://www.DobsonforSenate.com

Kennebunkport, ME

1. If you are for the privatization of Social Security you are not a Democrat, regardless of what party affiliation you have.

2. If you are against consumer credit protection laws that protect common people from predatory lending practices, you are not a Democrat, again regardless of party affiliation.

3. If you oppose commonsense regulations on financial markets, banking and loan syndicating you are a Republican--plain and simple. No exceptions.

I urge the press, the blogosphere and the voters to really examine the details of what Obama, Clinton and Edwards are proposing before the die is cast.

Come November, I do not want a choice between two Republicans, and that is what I see if Obama or Billary get the Democratic nomination. I'm not trolling--that is what I see and feel to be an accurate take.

David Alan Gregory

Marion, AR

Thanks so much for this fact-based article on Barack Obama. Most of the progressive community has been seduced by his charisma and his effect on young people. We've heard so much about the inspiration he creates. Meanwhile, there has been little acknowledgement of the hard facts. His voting record in the Senate, his propoals on bread-and-butter issues, and now, his list of economic advisors demonstrate that he is, at best, a centrist. More to the point, during periods less dominated by the interests of corporate America and Wall Street, a politician with his views on the economy would have been recognized for what he is, a moderate Republican.

As recession looms, and ordinary Americans lose their jobs, their healthcare or their homes, it is time for real change in our national economic priorities. With his record and his advisors, Obama almost certainly cannot deliver such real change--particularly if his proposals challenge the centrist Clinton from the right.

Nevertheless, The Nation, like many in the mainstream media, has devoted a great deal of ink to the "Hilary vs. Obama" choice for the Democratic nominee. If a progressive magazine does not care to amplify truly progressive voices largely ignored in the mainstream media, who will?

I hope I am wrong about Obama. He is an inspirational orator and an intelligent, obviously likeable man. Nevertheless, I make my decisions about voting based not on someone's public persona but on their public record. As a result, unlike his large and growing following, I am not filled with hope that real change is coming any time soon.

Donna Palermino

Cambridge, MA

You have confirmed my suspicions about the Clinton advisers in the Obama campaign. We do not need another Administration that refuses to regulate the excesses of big business and Wall Street. This information needs to be widely circulated in the progressive community and among minority groups who will be particularly hurt by these policies. You are to be congratulated for looking beyond the symbolism of the Obama campaign. The Democratic Party needs to be mentoring African-American politicians that represent the interests of the African- American community and the nation.

Pervis J. Casey

Riverside, CA