Senator Jim DeMint

340 Russell

United States Senate

Washington, D.C. 20510

July 18, 2008

Subject: Housing Bills

Corrected Copy

Dear Senator DeMint:

I am a banker with 30 years experience in most aspects of banking; Money Center domestic, International Banking, Savings Banks and Savings and Loans.

I listened to your comments the other day on Fox regarding the housing bills. I agree that the Fannie Mae and Freddie Mac open line of credit begins the final step of nationalizing the housing market. We are marching towards Karl Marx’s utopia.

The Freddie and Fannie bail out does little to solve the systemic problems in both these GSE’s. The system requires a complete overall, possibly placing these GSE’s in receivership, a full restructuring [break up] and completely privatize. These firms in reality are no longer needed. Should the congress and Treasury not resolve the problems we will be negligent by passing the problem to the next generation. In a normal course of business when a business entity begins to go bad, most lenders DO NOT LEND their way out of the problem, lending 101. It never succeeds.

The $300 bn bail out for owners and lenders is another mess. Consider this: 99% of all homes purchased prior to 2001 are occupied. Home built after 2001 are 82% occupied. There is an over supply of housing, as such demand will not catch up with supply until price resets and the market comes into equilibrium. Having borrowers who took out way to much house and unqualified mortgages rewards people for misbehavior. Keeping prices above where they need to be only artificially inflates the overall market and extends the problem. The solution will be painful for some folks.

This bill also rewards CountryWide for bad lending practices. Borrowers who had bad credit backgrounds and either falsified or provided no documentation will now be rewarded. This is certainly a move towards the government taking over the housing market. The taxpayer will ultimately pick up the tab for these people, while 97% of all other mortgagors pay their mortgage on time. Please note the following news wire regarding Romania.

Romania's president rejects new property law, says nation must return confiscated property

Canadian Business Fri, 18 Jul 2008 11:52 AM PDT

BUCHAREST, Romania (AP) – Romania's president is refusing to sign a law that he says represents a "reconfiscation" of property seized by the communists.

We are marching towards a society where home ownership is becoming an entitlement. The socialist think so and look where it got them

Finally, Senator Dodd received a most favorably rate from CountryWide. He is sponsoring the housing bill that greatly benefits CountryWide. Is there not a conflict here? The American people are not that stupid.

I can provide you with detail why these bills are flawed, and will have NO impact other than negative on the economy and the taxpayer.

Please keep up the great work on behalf of the American people.

Sincerely,

Michael J O’Brien