Analysts are predicting that as many as of the 7, banks in America may fail over the next 18 months, and one analyst even said that number might double over the next 3 years. At a press conference President Bush acknowledged the peril and then tried to assure us it's all going to come out okay. And I understand there's a lot of nervousness. But the economy is growing, productivity is high, trade is up, people are working. It's not as good as we'd like, and to the extent that we find weakness, we'll move.
Don't let those down-home names fool you. Those two huge institutions finance about half the country's twelve trillion dollars of mortgage debt. And they were about to go belly up. But not everyone thinks the government should be using your taxes to bail them out, especially with no conditions attached. But I would say And I'm, what I'm looking to do is the same thing you are, Senator, to minimize the cost to that taxpayer. And I think the surest way to do that is And I don't think this is a responsible The pain for them is real.
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They're hurting badly, and so are their communities. You can see the whole picture in one neighborhood in Cleveland, Ohio. Producer Peter Meryash and correspondent Rick Karr take us there. But things were different just a few years ago. The yards were well manicured. You could hear laughter. You could hear neighbors calling out to each other from across the street.
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At that time, there were a lot of gardens in the backyards, and people were very proud of their gardens, and they would pick the tomatoes, or they'd pick the peppers, and they would share it with neighbors. You would see people sitting on porches, reading newspapers and laughing and talking, listening to their music.
This house went after the man who owned it was admitted to a nursing home. There used to be a home on this empty lot until it was foreclosed, condemned and leveled. And the family that lived here came home one day to find that a Sheriff's bailiff had put their possessions out on the street after their bank foreclosed.
Anderson, who runs a community organization that's trying to fight the neighborhood's decline, says it's like a horror story. So, the house now next door to it, the house on the other side of it, and now those houses began to eat away at other houses. So, each time it looked like one house had actually infected the house next door to it, and it had taken on that same Dracula kind of look. And it was infecting even more houses. At one point last year, there were more foreclosures in Slavic Village's zip code than in any other in the country. Tony Brancatelli represents the neighborhood on Cleveland's City Council.
And it's, you know, seeing what's been happening in the families has been very heartbreaking.
Seeing what's been happening to our housing stock has been very heartbreaking. And so it's tough to wake up every morning and see that we're averaging two foreclosures a day in this neighborhood. That is just unheard of. RICK KARR: Here's what happened: The kinds of people who lived in Slavic Village were prime candidates for sub-prime loans; many of them were retired, so they'd already paid off most of their old mortgages but they were living on fixed incomes, so they didn't have enough cash on hand to repair regular wear and tear on their homes.
They needed a roof, they needed their porches repaired and their money was all tied up in the equity of their home.
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And that's what they needed to tap into in order to make any repairs. But the rules of the game had changed: Mortgage brokers and unscrupulous lenders were practically beating down Clevelanders' front doors, offering loans that were too good to be true. Well, here we are in modern day era. And there's no sheriff in town. The banks were robbing the people. He said the loans on offer weren't like anything that borrowers had ever encountered before. We're not gonna document your income. And it gets worse. I've sat in on probably counseling sessions, people facing foreclosure.
I'd say the majority of people fit the criteria of not having enough income, didn't come in with a down payment, had a bad credit score. Most of them got cash back at the close. How's that for an incentive? Their terms could be confusing, with shifting interest rates and so-called "balloon payments. Once the banks foreclosed and homeowners moved out, the buildings just sat empty.
All that the neighbors could do was watch them crumble. JIM ROKAKIS: And the real victim here is the person that lives on that block, that person who pays their taxes, plays by the rules, has done nothing to deserve what they're facing today, which is a devastated neighborhood, with their most valuable asset, their home, now worth virtually nothing. That's the victim. Renters, for one. Many lost their homes because even though they'd been paying their rent, their landlords hadn't been paying their mortgages.
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More than a third of all foreclosures nationwide are on apartment buildings or houses where renters lived. In Cleveland, that's affected thousands of individuals and families. Aretha Robinson-Kelly ended up in one of Cleveland's homeless shelters after a bank foreclosed on this building where she'd been renting an apartment on the city's East Side. And we were still paying rent and the water got shut off. And basically I wind up here in the shelter; my husband and I.
RICK KARR: Robinson-Kelly didn't just lose her home; she says she also lost four or five thousand dollars, her security deposit, pre-paid rent, and almost everything she owned. And I didn't have money to rent a truck. I just took things that I could. So I lost everything. There's no resources to help these people.
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He says the group's been busier than ever. MIKE PIEPSNY: Over the past year and a half, we've noticed a significant increase in renters calling, saying, you know, that somebody's been looking at my house, I just received notice, someone knocked on my door and said, "We have to be out in 30 days. However you look at the problem, 30 days to get your belongings, find a new place, come up with security deposit, and get your life back in order, it's just not enough time. But an increasing number are ending up in Cleveland's crowded homeless shelters.
So, it's almost percent likely that you will have to split up your family. Moms will go to one shelter. A mission, it should be noted, that Senator Alexander himself has. These are senators who have been around the block. These are guys who book. And the havoc wrought would threaten our system of. Dick Cheney had to come in as vice president and president of the Senate to.
And now, Democrats are going to pass the last fixes to align the. Orrin Hatch,. But you. Grassley of Iowa, as well as expanding health savings accounts as suggested. The letter was initially made public with. That brings. It sounded like a great idea to me, and we started. Instead it took five weeks and the vote was something like 97 to zero or Committee, Tim Kaine, joined us and told us he had only just heard the news. They will probably.