The Senate has responded to the housing crisis, but missed the mark big time. The American economy has lurched into recession thanks, in part, to the mortgage market and over 600,000 foreclosures. Some fault the borrowers for getting in over their heads in debt, but the truth is that lenders wooed the vulnerability of people wanting to buy a home. They were offered subprime packages they couldn’t afford along with boutique mortgages with nice short-run terms that led to this very long run hurricane. Lenders counted on making a few billion but didn’t count on the bottom falling out. Nor did they prepare for the possibility.

Then came the Foreclosure Prevention Act of 2008 that could have offered protection for struggling families caught up in the housing crisis. The Senate made a lot of hoopla over coming to homeowners’ aid, but fell short of doing anything meaningful for the those falling into financial abyss.

Senators refused to allow bankruptcy judges to change the terms of loans for primary residences. Judges already have the power to change loans terms for second homes, vacation homes, yachts, but not for the basic needs such as homes that people depend on as a roof over their heads.

Lenders and homebuilders made big bucks off the artificially inflated housing market after romancing vulnerable borrowers into bad deals. The question remains unanswered as to why the Senate wants to subsidize the villains instead of the real people who are being thrown out of their homes and into the street. Banks will get super breaks too if the feds decides to buy back risky mortgages, which will be backed by the government.

But that is not all. Another class bias is the provision of a $7,000 tax break for those who speculate on foreclosed properties. It seems to be common sense that stressed-out homeowners are the ones needing a tax break. This is a boon for those with plenty of money to multiply their means, as the real victims are offered counseling and tightening regulation.

“It is unconscionable that legislators would subsidize the speculation of the past – a speculation that led the mortgage banking industry to develop and aggressively market fragile mortgage instruments for needy buyers. It is further unconscionable that we would subsidize speculation in the future by paying people to swoop, like vultures, over the ruins of other people’s lives,” said Julianne Malveaux is an economist and president of Bennett College for Women in Greensboro, N.C.

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