Tuesday, August 23, 2011

$2,902,029,728 into Illinois Economy

From the New Bottom Line:

Fixing the Housing Crisis Would Create Pump $2,902,029,728 into the Local Economy and Create 42,893 Number of Jobs in State Annually, New Report Finds

Homeowners, Clergy, Unions & Community Organizations Call on Illinois Attorney General Lisa Madigan to Demand Principal Reduction for Underwater Homeowners as Part of Settlement with Banks

(Chicago, IL) While Washington, D.C. gridlocks over job creation, Illinois and Indiana Regional Organizing Network (I.I.R.O.N.) and The New Bottom Line have answers: by writing down all underwater mortgages to market value, the nation’s banks could pump $2,902,029,728 into the state’s economy, create 42,893 jobs in Illinois, save Illinois families $500 per month on mortgage payments, and fix the housing crisis once and for all, according to a new report entitled “The Win/Win Solution: How Fixing the Housing Crisis Will Create One Million Jobs.” Nationwide, the plan would inject $71 billion per year into the economy, create more than one million jobs annually, save families $6,500 per year on mortgage payments, and end the housing crisis.

Grassroots organizations across the country aligned with The New Bottom Line campaign are calling on State Attorneys General who are investigating the banks for foreclosure fraud to stand firm for a settlement agreement that (1) includes large-scale principle reduction for underwater borrowers; and (2) does not to release the banks from claims beyond the robo-signing scandal. This would provide real restitution for homeowners and allow states to sue the banks for wrongdoing connected to the origination of mortgages and the steps leading up to foreclosure.

“The banks are still acting like the economy is robust. Banks need to be held accountable for crashing the housing market and driving the economy into deep recession. Chicago homeowners are struggling to pay their boom-era mortgages with their recession-era salaries. The first bail out was for the banks, now it’s the banks turn to pay back the taxpayers. Writing down the principal and interest rates on all underwater mortgages to market value would bring in over two trillion dollars annually into our state-wide economy, creating over 42 thousand jobs. Its time to fix our economy.”

One in five Americans owe more on their mortgage than their home is actually worth. Collectively, underwater homeowners will have to pay down $709 billion in principal before they can start building equity in their homes. Every effort to reboot the housing market to date has failed because it has not done the most essential thing: reduce the massive debt load carried by underwater homeowners.

If the banks fix what they broke and wrote down principals on all underwater mortgages to current market value, it would inject a direct cash stimulus into the economy, redirecting billions of dollars that cash-strapped homeowners are currently paying on inflated mortgage debt toward other job-creating sectors of the economy. Nationally, the plan would lower homeowners’ mortgage payments by an average of more than $500 per month or $6,500 per year.

Six billion dollars per month that is currently going to mortgage payments would instead go toward buying groceries, school supplies, and other household necessities. As consumer demand picked up, businesses would start hiring again. The report estimates that putting $71 billion into American consumers’ pockets annually would help create more than one million jobs per year.

The report notes that the banks can afford to execute this plan. Last year, the nation’s top six banks paid out more than twice the cost of the plan ($71billion per year) in bonuses and compensation alone ($146 billion in 2010). Currently, the nation’s banks are sitting on a historically high level of cash reserves of $1.64 trillion.


Illinois and Indiana Regional Organizing Network is a grassroots, multi-issue power organization made up of organizations and individuals who seek a voice in the decisions that affect their lives. Current coalition members are: Southsiders Organized for Unity and Liberation, Northside POWER, Northwest Indiana Federation, and the IIRON Student Network.

The New Bottom Line is a new and growing movement fueled by a coalition of community organizations, congregations, labor unions, and individuals working together to challenge established big bank interests on behalf of struggling and middle-class communities. Together, we are working to restructure Wall Street to help American families build wealth, close the country’s growing income gap and advance a vision for how our economy can better serve the many rather than the few. Coalition members include PICO National Network, National People’s Action (NPA), Alliance for a Just Society, Alliance of Californians for Community Empowerment (ACCE), Industrial Areas Foundation of the Southeast (IAF-SE) and dozens of state and local organizations from around the country. Learn more at www.newbottomline.com

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