Editor’s Note: Heading into the winter months, the United States is facing two inter-related challenges, spiraling home foreclosures and spiraling energy prices. Together, the two problems could mean a very cold winter for millions of Americans.

In this guest essay, former Democratic congressional staffer Brent Budowsky urges emergency action on both fronts:

There should be a six-month freeze on home foreclosures while the Federal Reserve Board, Treasury secretary and congressional leaders bring together all stakeholders in the housing crisis to seek rational rescheduling of troubled loans with greater disclosure, transparency and fairness to all parties.

On the energy front, there should be an American summit meeting modeled after the Davos World Economic Forum to bring together government leaders, Wall Street firms, venture capitalists, private equity companies, consumer groups and businesses producing alternative energy and energy-conserving products to create a “JFK goes to the moon” program to address what Jimmy Carter called “the moral equivalent of war.”

In the mortgage-financing crisis, bad loans have been traded like Nasdaq stocks between mortgage-financing companies, blue-chip Wall Street firms and hedge funds. Meanwhile homeowners and our middle class are under siege from skyrocketing oil, gasoline and home-heating prices, from punitive costs for health, food and education, and from the destruction of American jobs through the export to low-wage, outsourced foreign jobs.

To a large degree the mortgage crisis was inevitable, as bubble-like loan practices combined with predatory practices and a middle class under economic attack from almost every financial source in their daily lives.

What is striking is not the number of Americans who should never have received loans, but the number of Americans who have suffered destruction of creditworthiness through forces beyond their control, and the reaction of lenders who rushed to foreclose and accelerated the collapse.

Even today, while the rational course is for lenders to renegotiate the terms and timing of loans, the resetting of far too many loans to punitive rates continues. Fired CEOs who received huge bonuses last Christmas for short-term profits now receive huge golden-parachute wealth this Christmas for long-term losses while foreclosures skyrocket.

Making matters worse, credit-card customers with perfect payment histories over many years are now receiving “change of term” letters that raise their rates immediately or impose rates as high as 35 percent if they fall even slightly behind.

Solid, long-term customers with excellent credit histories are pushed downward by emergencies outside their control, or with no delinquency at all, to finance the mistakes and shortfalls of others.

The crisis could spread from lender to lender, product to product, and customer to customer. It could bring down middle-class Americans with 100 percent perfect records, including renters evicted as landlords are foreclosed, homeowners whose property values collapse from the crisis, and taxpayers whose local property taxes rise because of revenue shortfalls plaguing local government.

If politicians worry about their low levels of popularity and financial institutions worry about credit risk today, they have seen nothing compared to the spiral and backlash if these practices cause a recession and bear market on Wall Street.

To halt this spiral, foreclosures should be frozen for six months. Mortgage lenders should fully disclose the risk and comprehensively renegotiate their loans. Credit-card companies should avoid punitive action against good customers.

The Federal Reserve should accommodate through interest rates and liquidity. Borrowers and consumers should have access to solid financial advice. Congress should enact measures to help both lenders and borrowers achieve stability, transparency and fairness.

Even assuming the deal is approved Americans should be extremely concerned that one of our premier financial companies is dependent on 10 percent ownership from a Saudi prince and an Abu Dhabi sheik who appear to condition their investment, flowing from massive petrodollar profits, on massive layoffs of Citigroup workers.

With the dollar collapsing along with mortgage loans and housing prices, we are witnessing one more giant transfer of ownership and wealth. American assets (and jobs) are sold at bargain basement prices to those with huge profits from petrodollar wealth, taken from Americans who pay the huge cost of petrodollar prices.

It is time for the massive infusion of investment and venture capital to the entrepreneurs and cutting-edge businesses in new energy that will liberate America and win the moral equivalent of war that we are now losing on far too many fronts, at far too great a cost.

Brent Budowsky was an aide to former Sen. Lloyd Bentsen and to Bill Alexander, then the chief deputy whip of the House. A contributing editor to Fighting Dems News Service, he can be read on The Hill Pundits Blog and reached at brentbbi@webtv.net. [This article first appeared in The Hill.]

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