Foreclosure Fiasco

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.

Comments

[Sundialsvc4]

Obama's capabilities to do anything are, by definition, quite limited. I think that his leadership direction is quite clear... but obviously the bribery in the halls of Congress is higher than ever.

And there is huge money to be made in foreclosures. Buy up properties, lease them back to the occupants under terms which keep the weight of the mortgage still(!) over their heads, and you have just created a nice, profitable serf who will work the landlord's lands. This is an investment opportunity for the few and the rich and the powerful which they will not overlook. Private property ownership in the suburbs of major cities will become a thing of the past...

[KillTheMessenger]

People will typically not rent houses and landlords will rarely make a profit on a single family home. Duplexes and apartment units are for the most part the only kinds of properties that a landlord can hope to make money on. And banks really don't care to be in the rental business. It's not what they do and it's not nearly profitable enough to be worth their time.

It might be a good time for rental unit developers, though.

:-)

[bluevase]

Investers are buying up foreclosed homes by the 100s, expecting to make money, a lot of it. People will rent houses because people have to live somewhere. ,

[sophierose]

As much as many of us have long supported a government health care plan, right now, it just seems like a distraction. As one who tries to heed the wisdom of "pick your battles", it is hard to see how health care trumps the economy right now. As a strong supporter, I have come to realize that our President is only human, and the study of the financial and mortgage crisis is not exactly "light reading". However, I think the time has come for him to come to grips with it and focus on it, and use the considerable power of his discipline and scholarship on it. It is not hard to imagine that just as many taxpayers go to an accountant and say "Here, you deal with it.", President Obama has followed suit with Tim Geitner and the rest of the Wall St. Gang. I think it is possible that he may have misplaced his trust in people who have a pretty skewed view of the business world..I hope he gets with the program, and soon, and studies this himself. Right now, his financial advisors seem more like Wall St. lobbyists, than true, impartial advisors.

[AnotherMcIntosh]

"Why was I so naive as to have expected this Democratic president to not do the bidding of the banks ..."

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-class person.

Another may be that the political system is rigged to support binary thinking. When we are forced to choose between two politicians and we know that one politician has interests which are adverse to ours (and maybe even a little crazy), we hope that the other politican wants to do good for us. All it takes is a little push and then, even in the absence of otherwise sufficient evidence, we are in the "I believe" and "I trust" category.

Robert, keep up the good work. You might make a difference.

[castlerider]

I too, felt a ringing in my-ears sort of slap in my face when I learned that Obama insisted on having Larry Summers and the likes of Rick Rubin on his financial "change" team.

Such an absolute bitter disappointment. An insult to the intelligence to so many of us who are counting on this guy...
And look what we're getting now. Banks aren't lending, and the motor of our recovery is so predictably stalling, thanks to the lobbyists and right-wingers this president has catered to, like a chump.

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 corporatitists and lobbyists say because they're sure as hell gonna say it anyway... Just like he shouldn't worry about what Ahmadienejad says about him, because he'll say it anyway. These people aren't your friend, they're a whole lot more your ENEMY. THEY WANT YOU TO FAIL.

Get a clue, Obama...

.

[jmpurser]

Agreed. Obama's "top down" approach to fixing the economy was a real boon to propping up the rich and maintaining the miserable status quo. It was also a MAJOR disappointment and apparently a failure.

[TrueSense]

!
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 Reconcilliation in the Senate. It's strange how th Repubs got so much done with a 10 vote majority in the Senate and the Dems cannot do nothing with a 19 vote majority !

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 redirecting funds and then firing people when it was over.

The repubs do not care because they are not giving up anymore seats voluntarily. They might be a one note party and have nothing real to offer, but they are disciplined pit bulls. You want an unrelenting push or defense, get a Repub. You want someone that falls down on the word boo, get a Dem.

Where are the Dems talking points ?

[TrueSense]

Ok, I voted for this con game too, but I knew it was likely. I wanted Edwards, then Clinton, or Nader.

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.

!

[Kassandra]

Obama WHIPPED for the bailouts while still in the senate....­..........­.....and then the banksters gave him about $100 million for his troubles/campaign. Meanwhile he tell sUS that he got ALLLLLLLL his $$$$$$$ from small donors....­..........­..........­.hmmmmmm.

There were alot of red flags that this guy was bought.

Think of it this way, it might make you feel bettah...We'd be at war with Iran right now if McCain was president......or Sarah Palin would be president due to a McCain cerebral event or something, and we'd be having witch burnings.

Take HEART...we're only still in Iraq and now spending billions in Afh-anistan!!!! There, Isn't that bettah?????

[outnow]

When both Obama and McCain supported the Bush-Paulson bailouts, and when Obama appointed his economic advisers, it was all too apparent that banks would come first. To me, this was a disappointment but no surprise since investment bankers were the largest Obama contributors. Obama was going to accept public funding for his campaign but there was too much investment banker money. I see a number of bait-and-switch issues that Obama ran on such as NAFTA, opposition to the Iraq invasion, health care, etc., etc.

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 "tweddledom and tweedledee."

The whole purpose of the Democratic Party is to absorb the progressive branch and all true reformers and to neutralize any potential for real change by co-optation.

It is always good to see that Bill Clinton was the best Republican president ever until Obama. Both of these men have pushed deregulation and not-so-free-trade deals for the sole benefit of rich Wall Street benefactors. Not even the Republicans could have pushed their own agenda in many areas.

[Lorianne]

Hmmm ... you'd think people would be out in the street protesting this sort of thing.

[KillTheMessenger]

Why would someone who was greedy and made a poor financial decision protest? You would think they have all hands full hiding it from the kids that Mom and Dad have bankrupted the family and that there is very little chance that they can ever go to college...

:-)

[Kassandra]

You've got it all wrong.: the REAL question is "why would anyone who can watch American Idol and "Reality TEEVEE get out in the streets????"
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! Congratulations, it's all about YOU!
Call American Idol or one of those things, someone! This guy has POTENTIAL!!!!!! ;-))

[TJCole]

We're a government of the banksters, by the banksters, and for the banksters....not the people..!

Didn't you know that Robert..?

Jefferson warned us, so did Woodrow Wilson after he realized how he had betrayed America...

[KillTheMessenger]

Jefferson also had kids with his slave mistress, if I remember correctly. I thought they just identified a few of his descendants with DNA analysis. As for Woodrow Wilson, I bet he did some pretty outrageous things, too, just have to look them up in the history books.

:-)

[AnotherMcIntosh]

You don't usually make ad hominem arguments.

[FearlessFreep]

"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?" Because Scheer's a "pragmatist."

[edmond dantes]

"Chump Change You Can Believe In!"

Obama apologists and worshippers, where are you now?

[KillTheMessenger]

And just why won't you answer my questions below?

:-)

[jalex26000]

Because your question is irrelevant. It only serves to take the focus of the issues.

[Rule Of Law]

Did you read this article or are you just back on your horse tilting at folks you think you can run over--

"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."

COLLUSION. RACKETEERING. CONSPIRACY TO COMMIT.

read it again...

[Marnie1]

And want President (think Dubhya) created this mess and left it unattended for 8 years, along with starting 2 wars we can't pay for?

YOu wanted 4 more years of that?

[edmond dantes]

No, nor do I want more of this binary/false choices nonsense.

[plumnelly]

Our financial institutions and corporations are no better than the gamblers in las Vegas. Everything is based on short term profit which drives insane risk taking with our financial security and proved to be the case. No other area would we think it's alright to have no regulations or transparency. It has been total insanity and now the expected chaos in our markets. It's a revolving door for self serving narcissists in Washington DC nothing more as we've all discovered. The Savings & Loan fiasco was a precursor to the meltdown of our banking system. The fact that regulations weren't beefed up or tightened and transparency completely disappeared made the current depression inevitable. Yes depression, only H1B'S have job security, not the American worker because their cheap, not better educated. Remember they come here to be educated. Just ask all the Americans in the computer industry about the rigged manipulations by the ceo's of the computer companies. Greed and dishonesty is the real objectives of our government and business. When you lose faith in your government to represent the people, it's time for real change and a third pary. The people's party is a real viable option now. The bankers and the corporatists ( who continue outsourcing our jobs with double diget unemployment unabated ) have given us incentive for REAL CHANGE.

[RetireGreen]

Robert:
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 discovering that all the money you have has disappeared.

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.

Unfortunately, the arrests and reforms that should have happened with the bailout did not occur, setting the stage for a second collapse. Exposing the fact that Washington and Wall Street are one and the same. I suggest you follow Simon Jenkins' writing for more details.

[mnich13]

-- "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?"

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?

[KillTheMessenger]

The truth is that very few people are losing their homes compared to those who will keep them... and who are paying an outrageously large mortgage for a very long time.

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 consequences of their loan's structure.