It's not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust. The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free fall in housing foreclosures.
As the Wall Street Journal reported Tuesday, "The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing." The same association said that the total refinancing under the administration's much ballyhooed Home Affordable Refinance Program is "very low."
Aside from a tight mortgage market, the problem in preventing foreclosures has to do with homeowners losing their jobs. Here again the administration, continuing the Bush strategy, is working the wrong end of the problem. Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street.
State and local governments have been forced into draconian budget cuts, firing workers who are among the most reliable in making their mortgage payments -- when they have jobs. Yet the Obama administration won't spend even a small fraction of what it has wasted on the banks to cover state shortfalls.
California couldn't get the White House to guarantee $5.5 billion in short-term notes to avert severe cuts in state and local payrolls, from prison guards to schoolteachers. Compare that with the $50 billion already given to Citigroup, plus an astounding $300 billion to guarantee that institution's toxic assets. Citigroup benefits from being a bank "too big to fail," although through its irresponsible actions to get that large it did as much as any company to cause this mess.
How big a mess? According to the Federal Reserve's most recent report, seven straight quarters of declining household wealth have left Americans $14 trillion poorer. Many who thought they were middle class have now joined the ranks of the poor. Food banks are strapped and welfare rolls are dramatically on the rise, as the WSJ reports, with a 27 percent year-to-year increase in Oregon, 23 percent in South Carolina and 10 percent in California. And you have to be very poor to get on welfare, thanks to President Clinton's so-called welfare reform, which he signed into law before he ramped up the radical deregulation of the financial services industry, enabling our economic downturn.
Citigroup, the prime mover for ending the sensible restraints of the Glass-Steagall Act of 1933, is now a pathetic ward of the state. But back in the day President Clinton would tour the country with Citigroup founder Sandy Weill touting the wonderful work that Weill and other moguls were doing to invest in economically depressed communities. It wasn't really happening then, and now millions of folks in those communities have seen their houses snatched from them as if they were just pieces in a game of Monopoly that Clinton and his fat-cat buddy were playing.
Once Weill got the radical deregulation law he wanted, he issued a statement giving credit: "In particular, we congratulate President Clinton, Treasury Secretary Larry Summers, NEC [National Economic Council] Chairman Gene Sperling, Under Secretary of the Treasury Gary Gensler, Assistant Treasury Secretaries Linda Robertson and Greg Baer."
Summers is now Obama's top economic adviser, Sperling has been appointed legal counselor at Treasury, and Gensler, a former partner in Goldman Sachs, is head of the Commodity Futures Trading Commission, which he once attempted to prevent from regulating derivatives when it was run by Brooksley Born. Robertson worked for Summers in pushing through the Commodity Futures Modernization Act, which freed the derivatives market from adult supervision and contained the "Enron Loophole," permitting that company to go wild. Robertson then became the top Washington lobbyist for Enron and was recently appointed senior adviser to Fed Chair Ben S. Bernanke. Baer went to work as a corporate counsel for Bank of America, which announced his appointment with a press release crediting him with having "coordinated Treasury policy" during the Clinton years in getting Glass-Steagall repealed. As a result of deregulation, B of A too spiraled out of control and ended up as a beneficiary of the Treasury's welfare program.
Why was I so naive as to have expected this Democratic president to not do the bidding of the banks when the last president from that party joined the Republicans in giving the moguls everything they wanted? Please, Obama, prove me wrong.
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And there is huge money to be made in foreclosur
It might be a good time for rental unit developers
:-)
You, of course, are not alone. If we want real change, perhaps all of us should be asking ourselves that question. And do so in more than just a transitory way.
One answer may be, for example, is that we fail to recognize that Obama and others are political tycoons. We may want them to be like us, but they are not. They are playing for all of the marbles, or as many of them as they can grab. They are playing for power and the ability to control resources. They have more in common with the Wall Street tycoons (like the ancient taikuns of Japan) than they they do with any average person on the street or any middle-cla
Another may be that the political system is rigged to support binary thinking. When we are forced to choose between two politician
Robert, keep up the good work. You might make a difference
Such an absolute bitter disappoint
And look what we're getting now. Banks aren't lending, and the motor of our recovery is so predictabl
He might as well have hired RUMSFELD for defense ! !! ! !
He needs to stop worrying about what FOX news says because they're going to say it anyway.
He needs to stop worrying about what corporatit
Get a clue, Obama...
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The Repubs pushed that sham Medicare Part D through by twisting arms and holding open the vote for 3 hours in the house and using Budget Reconcilli
The Dems are just using the 60 votes as an excuse becasue they are bought off and wimps!
The Repubs have all kind of hypocrits exposed in the senate, but they rally around them in the senate. Ensine appears he may have been doing more than just having an affair. He may have been redirectin
The repubs do not care because they are not giving up anymore seats voluntaril
Where are the Dems talking points ?
He fought changing the Enron loop hope even as he ran. He kept showing deferance to bankers. He was to the right of HIllary on mortgage relief and no usary laws, yet Hillary was mainstream and he was the "leftist" ! Ya, right !
Until almost every Robert Rubin project became a piece of .. , Obama thought he was a genius s and pointed to him as one of his top advisors. Geithner is a protege of Rubin and Rubin had to move on to get Citi bailed out.
Also, this Pres used his mamma's suffering and death to try and show his commitment to health reform but always said things that were relatively safe. even then. If he offers anything or won't fight for something that would have helped his mother's situation, it will tell you a lot about his mindset and that he is not up to real change unless it is easy. He will be tough in protecting Wall Street though.
Despite his mother, Obama is now punking out on healthcare with his Repub light enforcer, I mean DLC man, Rob Emmanuel folding their cards before even necessary. He wants them to deal with the Repubs. Why ? To feed Obama's ego or some there is not meaningful reform. He should be pushing the Dems.
!
There were alot of red flags that this guy was bought.
Think of it this way, it might make you feel bettah...W
Take HEART...we
Most people are realizing that Americans are given little real choices at the pools because the candidates are vetted in advance and co-opted or bought off. The political spectrum on military and economic issues is a narrow spectrum indeed. In the old days, it was called "tweddledo
The whole purpose of the Democratic Party is to absorb the progressiv
It is always good to see that Bill Clinton was the best Republican president ever until Obama. Both of these men have pushed deregulati
:-)
Obviously things are going to magically get better if we only MAINTAIN A POSITIVE ATTITUDE! Everyone KNOWS America is too great to fail so, why bother??? Besides, we may miss "McGiver" ( you're prolly too young to remember that TEEVEE show)
You just sound SOOooooooo American! Congratula
Call American Idol or one of those things, someone! This guy has POTENTIAL!
Didn't you know that Robert..?
Jefferson warned us, so did Woodrow Wilson after he realized how he had betrayed America...
:-)
Obama apologists and worshipper
:-)
"Summers is now Obama's top economic adviser, Sperling has been appointed legal counselor at Treasury, and Gensler, a former partner in Goldman Sachs, is head of the Commodity Futures Trading Commission
COLLUSION. RACKETEERI
read it again...
YOu wanted 4 more years of that?
You are half right. The banks had to be saved with a bailout, otherwise the entire banking system would have collapsed, taking every American's checking account, savings, CDs, IRA's and 401k with them. This is why Congress was warned of Martial Law if they did not approve Paulson's bailout. Can you imagine waking up and discoverin
What do you think the reaction of 200 million heavily armed Americans would be if the Govt. said sorry, but all your money is gone, and there is nothing we can do about it? It would make what's going on in Tehran look like a Boy Scout Jamboree.
Unfortunat
I would think it would be pretty much the same reaction to all of those people losing their homes and being told there's nothing to be done about it.
If the government had thrown all that money at the banks by killing the so-called toxic assets by paying off all of the mortgages, would we be better off, or worse off, today?
The real losers are not the ones who walk away from their properties but the ones who hold on to them and who will have to pay two or three times the property's value because they bid too high and didn't think about the consequenc