Apparently there is something more dysfunctional than the two-thirds vote requirement to pass a budget in California, and that is the lack of laws reigning in Wall Street’s out of control actions during the mortgage boom. As a direct result of industry players foisting risky and unsuitable loans on homeowners, a massive wave of foreclosures occurred that has devastated our economy and state and local governments.
Approximately $4 billion of California’s budget deficit this year is attributable to the foreclosure crisis, caused in large part by the actions of the Wall Street firms that the Bush Administration wants to bail out. If the federal government gives Wall Street executives the largest taxpayer gift in the history of the free world, then it certainly ought to consider giving states and local governments the aid we need to help struggling everyday citizens.
More fundamentally, we need to reform a broken mortgage system. While this colossal taxpayer bailout addresses the symptoms of the foreclosure crisis, it does nothing to cure the root cause: the unregulated selling of risky and unsuitable mortgage loans across America.
I also call on Governor Schwarzenegger to sign AB 1830, a common-sense mortgage reform bill that passed with bipartisan support in the legislature. AB 1830 bans predatory practices in the subprime market and provides strong enforcement mechanisms to ensure compliance. At the very least, we can reform California’s own mortgage industry so that a crisis of this magnitude does not happen ever again in California. Enough is enough.
Assemblymember Ted Lieu is the Chair of the Assembly Rules Committee and former Chair of the Assembly Banking and Finance Committee. He represents the 53rd Assembly District, which includes El Segundo, Hermosa Beach, Manhattan Beach, Redondo Beach, Torrance, Lomita, Marina Del Rey, and portions of the City of Los Angeles.
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