Michael Maiello's picture

    Just Desserts

    I'm very sorry that I'm about to pile on Obama again.  But I'll keep it short.  And really, it's less about Obama than about the mood of the country at this point.  Via Atrios I give you a transcript of Obama talking to bloggers about the economy.  I should preface this by saying that it's an awesome thing that we have a President who talks to people of all walks in such a reasoned and open way.  But search for the word "deserve" and read the paragraphs around those words and then reread cmaukonen's post about the selfish turn of our culture.

    I get it.  People work very hard and are held reponsible for the fates of themselves and their loved ones.  The demands of the world, which are myriad, can grind one down to a selfish core.  But it disturbs me to see the President talking about Americans in trouble who don't "deserve" help.

    He names a few types of homeowners who don't deserve help to keep their homes.  Owners losing a second home, speculators and "people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it."

    I can take owners of second homes on a case by case basis.  If it's an investment property, the owner actually can get help, including modification of mortgage terms, through a bankruptcy court. Or maybe it's some one who had to buy a second home for an aging loved one -- I don't know.

    Speculators?  Everyone hates them, right?  Though there was a time where buying a junked home, making it nice and reselling it at a higher price was considered a productive activity.  And... it is!  People like that, who might be mistaken for "speculators" can help make decaying neighborhoods thrive.

    Finally... "people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it."

    For shame, Mr. President.  I can see where owners of second homes and hopeful flippers might not make the most compelling cases for sympathy but is the President of the United States really telling the American people that if at the whim of the Angry Market God you are left bereft of your job and tossed out of your home that the government has no obligation to step in and try to stop that from happening?

    That's disgusting.  Especially when that same government decided that AIG's counterparties, including Goldman Sachs, Deutsche Bank and Societe Generale deserved to fully recoup their money on investments that through no fault of their own had gone down.  That double standard remains fully in place.

    I also think people should be a little more careful when talking about what other people "deserve."  That's just nasty business.  Especially for the President. 

    Comments

    Thanks, Destor, for sharing you ire.  I have been boiling over since I read some of the transcript of his interview with Stewart, but more about the utter lie he told about his administration 'solving the 2007-2008 for less than 1% of GDP, as compared to the S&L crisis, which cost 2.5% GDP'.  (Sadly, I read right by the section you quote in my haste.)  It's such a grotesque misrepresentation, and it harms Americans by treating us all like idiot children.  The creative (ahem) bookkeeping that allows any of his bogus numbers to be used is one more enormous gifts to the banks and sets the stage for the next bank bailout.

    I have kept my fingers away from my mouse, which has wanted to start cutting and pasting various economists' take on the true costs, which will obviously extend far into the future, and ensuring permanent misery for untold millions of Americans as well as citizens around the world whose economies have been infected by our lying, worthless casino gambling.

    I decided not to pour forth yet, too chicken to become an election-ruining pariah; but come November 3, after the shock wears off, I think we all have to face what's really going on.  And Obama, Geithner, Bernanke, and Summers need to be made aware that we know, or will educate ourselves to know, how they have screwed us.  We all wait with baited breath to see who will replace Summers, and whether if it's a good choice, if that person has influence whatsoever.

    Oops; sorry.  I didn't mean to go on and on.  But my hat's off to you for expressing your anger at such a disgusting sentence.  Obama thinks that good PR is the answer to the crap his administration has promoted in the banking sector.  His statements about who didn't deserve cramdown are insulting, and the protocols built into HAMP are pure perfidy, and goldmines for the banking industry.


    I just found this on-point and heart-wrenching quote from Damon Silvers, Special Counsel to the AFL-CIO, speaking before the Congressional Oversight Panel on mitigation of foreclosures:

    "As I have said at every hearing on this subject, foreclosing on a family’s home is not a mere financial transaction. It marks a profound financial loss and often devastating emotional defeat for the homeowner, psychological trauma and social dislocation for the homeowners’ children, falling property values and destabilized communities for the homeowners’ neighbors. Mass foreclosures are a sure sign of a failing economy and a society that has been unable to provide basic economic security to its citizens. Mass foreclosures should no more be encouraged by our government than should contagious diseases or catastrophic floods."  (my bold)

    I hadn't heard that Ted Kaufman is taking Liz Warren's old job.  He'e great!

     


    Thanks for this.  Yes, it is a kind of natural disaster.  I can't believe we allow it just because we've decided that the people are getting what they deserve (or don't deserve any better).


    Destor, I am if anything usually MORE critical of this administration than you. But you're WAY overanalyzing these remarks. If this was a prepared speech or press release, then yes, maybe. But I don't think he means to say these people belong to some contemptible class of 'undeserving'. He's just throwing out different types of situations surrounding foreclosures and rough priorities when it comes to the question of whom to help. People who have lost their jobs and where restructuring the loan still won't help are a regrettable case where there's not much the government can or should do. They need to move. Basically if you have a finite amount of money to work with and trying to get the most utility out of it, you need to take questions of fairness into account. People who were speculating aren't necessarily 'undeserving', but they are people who got into the game as speculators, where a part of the game was the risk. These houses aren't their homes. And it's not the government's job to save every speculative enterprise in the housing game. So I agree with him that the priority should go to families who are LIVING IN that house, where these are their homes, not just businesses, and amongst those families, the priority from a pragmatic point of view, the money that there is should go to helping out those families who can actually save their homes through a reworked loan.

    Beyond that, yes, the administration should be doing much more, and HAMP as it stands is a catastrophe. They should be hammering down on servicers involved in all the paperwork fraud on one side through the OCC and the DOJ, and as they try to offload their problematic loans, have F & F buy them up at a big discount, enough of one that they can take 30 to 40% off principal as they modify them and make these loans affordable again, without causing too much of a loss for the tax-payer.


    He names a few types of homeowners who don't deserve help to keep their homes.  Owners losing a second home, speculators and "people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it."


    The first one I agree with Obama on. If you have a second house (a number of people can baerly afford a first one) and it looks like you may lose it, then dump it for the loan value at least - if possible. And speculators....speculation is a risk. If you cannot afford to lose everything, then don't speculate.

    But the second example I do not agree with at all. The reason they can not longer afford the house is because the economy went into the dumper and that is not their fault but the banks fault. And the bank can jolly well go suck eggs.


    My impression is the administration and the Fed have been doing everything they could to keep housing prices from a further collapse. Their reason being (the usual) - it would cause big losses for the big banks which still hold a lot of paper and own a lot of houses. This might lead to general deflation, which is OK for those on fixed income or with jobs, but a bonus killer for big finance and bankers, and ergo their political contributions to fund the ad rubbish currently on TV, which helps to swing elections, and elect Wall Street friendly politicians.

    Whatever scintilla of effort the Democrats have made to help homeowners stay in their homes is, of course, more than the GOP would do when they take the House, which is kick people out even faster by quick and dirty legislation allowing foreclosures to proceed unhindered, and then cut housing assistance, Medicaid, unemployment benefits, the minimum wage, Social Security, food stamps, education grants, veterans care and taxes on corporations and the richest 1/2 of 1%.


    I do not see anyway that this can play out and not have some major consequences. Economically and/or politically. Any additional attempt to bail out the big banks and/or interfere with judicial system on this would be political suicide.

    In the wake of mounting public outrage, attorneys general of 50 states and the District of Columbia have launched a joint investigation into what financial writers are calling "Foreclosuregate." Industry spokespersons have downplayed the controversy surrounding foreclosure mills and "robo-signers." Bank of America and JP Morgan Chase are conducting internal reviews of thousands of foreclosures, but say they believe all the underlying facts in their foreclosures are true and that any potential issues will be quickly addressed.

    However, Bank of America and GMAC stopped foreclosures in all 50 states and Chase stopped them in the 23 states where a judge must approve foreclosures. Other lenders like PNC Financial and Litton Loan Savings followed suit in what amounted to a national moratorium on foreclosures. But it only lasted a couple of weeks. Bank of America and GMAC have since started up foreclosure suits again despite the bad press, pressure from bondholders and even the Federal Reserve, which wants big lenders to start buying back the bad mortgages on which they are trying to foreclose.

    "The bottom line is not that those properties won't be repossessed. They simply won't be repossessed as quickly," said Rick Sharge, vice president of RealtyTrac. But others predict that if GMAC and Bank of America stick to their guns, they just might go down in smoke.

    "This is not simply a glitch in paperwork," wrote Iowa Attorney General Tom Miller, who is heading up the states' joint investigation into the mortgage paper fraud mess.

    "This was an industry wide scheme designed to defraud homeowners," Florida attorney Peter Ticktin told The Associated Press.


    It's all good Destor.

    Hell it will even get gooder after Tuesday.

    This time next year all public entitlements will be slashed in half except for those entitlements going to the big corps and the top 2 percenters.

    Unemployment insurance, SS, SSD, SSI, Medicare, Medicaid...you name it, the program will be slashed.

    Congress, instead of investigating the thousands of felonies committed between 2001 and 2008 which they refused to do, will instead have meaningless hearings of supposed misdemeanors perpetrated by the current administration.

    Regulators will be hamstrung and/or defunded.

    There will be more and more and more defaults on mortgages.

    Health care legislation already passed will be gutted.

    Speeches and presentations on cable news will become more and more radical and fascistic.

    It's all goooooooooooooood.

    And two years from now a former mayor of a town of 8000 folks and 1/2 term governor will be elected President of the United States.


    GOP Mission Statement: Our mission is to get the government out of government!


    Ya got that right, Arthur...

    But we will have shown them!


    Destor, Emptywheel at FDL had this up concerning cramdowns: which homeowners they may or may not work for; he linkds to Dday's and Felix Salmon's opinions.

    http://emptywheel.firedoglake.com/2010/10/28/some-questions-on-principal-reductions/


    ....but is the President of the United States really telling the American people that if at the whim of the Angry Market God you are left bereft of your job and tossed out of your home that the government has no obligation to step in and try to stop that from happening?

    Well, it would seem he is telling the American people that. And as far as I know the government doesn't have an obligation to do that. Every year going back since people have borrowed money to buy homes, people have had lost their homes to foreclosure. It is an awful thing. But I just don't remember anyone pointing out that these foreclosures should have been avoided as a result of federal government intervention. Government intervention has only come into the conservation as the magnitude of the crisis has risen to such a degree over the past few years. It's not because losing one's home in 2010 is somehow more awful than losing it in 2004 or 1990 or 1955.  

    But it would seem the focus is not on the nature of the action being called upon, but on the word "deserve."  As if Obama is denying assistance because he is asserting that they are less worthy as human beings.   But to expect Obama to be able to push through this kind of assistance at a time when more and more Americans are railing against such a thing is expecting a lot.  And since this is being viewed as an obligation, I am assuming then it would be not have any sunset or some arbitrary number of foreclosure rate (i.e. we can sleep at night if only there is one 900 homes receiving a foreclosure filing).


    On one hand, if you view a foreclosure crisis as a natural disaster, as was suggested above, you might equate a few foreclosures to rain and a lot of them to a hurricane.  And you prepare for hurricanes and try to mitigate the fallout, right?

    But... these are individuals.  So there, you got me.  Any time a mortgage can be reasonable modified to prevent the seizure of some one's home, it should be.

    But remember, this is a special case.  House prices have never fallen this far, this fast before.  And that is not the fault of people who entered into honest (and government encouraged) contracts to buy homes.  So maybe the standard should involve falling asset prices, both nationally and within a locality.


    I think there using the standard involving a falling asset price would be something that could be legitimately presented.  Personally, I'd be all for some massive government bail out for home owners (even though I'm a renter for life), but it ain't gonna happen.  We know it and Obama knows it.  So what is needed is something that can be sold that helps out the most people possible.  And the way that it is sold is utilizing the catastrophic nature of situation. 

    Natural disasters happen all the time. A wind storm comes through and a tree falls over and takes out a house.  Maybe it makes the local news.  If the homeowner was forward thinking and capable, they bought home insurance.  But no one talks about the feds helping out with this natural disaster if the person didn't.  But if the wind storm wipes out 30% of the homes and businesses, then the feds are seen to have a role.  Unlike hurricanes and floods, this kind of housing situation is not something we have dealt with as a country before.  What are the parameters?  asset price as a baseline measure is a good place.  There might be others.  Measures that can be applied both locally and nationally that would then engage federal assistance automatically.


    I was about to comment on this vein but you beat me to it.  I think I'm gonna get a lot of shit for this, but here goes.  I look back on Prohibition as an example, okay?  What seems like a great idea to help protect everyone ends up becoming a law simply because - at the time - it seems like what is needed.  "At the time" being the operative words.

    I'm in no way trying to make light of the housing crisis today, nor do I know all my facts on the Prohibition laws back in their day, but the gist of my point here is that not every crisis deserves a whole new set of laws.

     


    What was the crisis that Prohibition theoretically addressed? My point being, until prohibition there was no systemic lawlessness related to alcohol - prohibition *created* the lawlessness.

    In the case of the current topic - bad actors have engineered holes in our legal and regulatory system that allow them to rip people off and reap mind boggling personal rewards (the top earners now average $500 million dollars a year from this rip-off .... up from $90 million last year). Doesn't that seem to be the exact situation we as a nation implemented a body to create legislation to protect society from?

     


    What was the crisis that Prohibition theoretically addressed? My point being, until prohibition there was no systemic lawlessness related to alchohol - prohibition *created* the lawlessness.

     

    http://en.wikipedia.org/wiki/Temperance_movement#United_States

    Granted, there was no crisis at the time, but 36 states went for it...BEFORE "prohibition *created* the lawlessness."

    Just sayin'.

    And as I said, it's a poor example, but it's still an example.  In the case of the current topic, however, may I just add that loopholes have been spotted and taken advantage of for decades, if not centuries, in many cases, not just this current one.

     

     

     


    I must be misunderstanding your point. I take this as an argument against passing laws to address these loopholes. That to me is full-on insane. And I didn't say they were spotted and taken advantage of, I said they were engineered. "Same as it ever was" can also be applied to that, but it isn't the same thing at all. In either event, we have a pretty extensive history of passing new laws in response to both passive identification and intentional engineering of regulatory holes for the purpose of exploitation. To my knowledge, that is the only mechanism by which such abuses have *ever* been effectively reigned in.

    Not that new laws are the ONLY thing I'd like to see brought to bear. Let's face it, legislation faces hurdles and delays that the executive agencies simply don't face. So I do look more to the executive to employ and interpret their authority under the existing laws - creatively if necessary - to go after these SOBs with both barrels and a bayonet. That is why I find Obama's apparent priorities on this issue so disheartening ... at this point, I'd be happy if they'd at least break out a rubber-band gun.

    I see the executive's role to aggressively knock back the acute symptoms (as experienced by the majority of Americans) to keep this from killing us giving congress breathing room to address the underlying chronic disease. Sadly, the current method of declaring the economy "stabilized" seems to be taking one guy who makes $500 million ... averaging him with 500 people who make $0 - and calling us all millionaires. We're pretty fucked because the ultra-wealthy get to choose how to do the math right now. We really do need some better laws.


    That's an interesting way of looking at things.  Though I'd stress that no new laws need to be passed to solve this problem.  President Olympia Snowe doesn't have to go along.  We own: Citigroup, Fannie Mae, Freddie Mac, AIG, Ally Financial -- businesses with substantial cash and mortgage related assets that could be run for the express purpose of mitigating this crisis, if we as owners chose. If we had acted sooner we could have done it when we owned equity in even more banks.

    Or, the Fed could act.

    But we don't need any new laws.


    But couldn't I please, please, please have Glass-Steagall back?


    Well, as a Charlottesville resident, I can say that our President's visit in support of Tom Periello was absolutely wonderful.  He was so inspiring, and hit all the right buttons.  I sincerely hope that his words will get people out to vote, and since I am canvassing on Sunday, I hope everyone is fired up!

    Tomorrow:  I'm taking the train to DC to go to the Rally to Restore Sanity.  My signs:

     

    REFUDIATE INSANITY!   You Betcha!

     

    and

     

    I WANT MY COUNTRY FORWARD

     

    PS == Is anyone except me worried about Orlando?  She is in Indonesia, and I am hoping that the only problem is one of connectivity, but she is on my mind every day as I check to see if she has posted.

     


    I was worried about her, too, C'Ville. But she has posted after the disaster and seemed both very objective, and very empathetic about the damage which would suggest that she, herself, was not imperiled. 

    But, hey -- Orlando! -- are you OK? Please say, OK?

    C'Ville -- cannot wait for your on-the-scene feedback about the ralley. TELL EVERYTHING, OK?


    I'm fine. Just having a busy week. Both the earthquake/tsunami and the volcano were far away from Jakarta and life goes on in the city uninterrupted. Thanks for worrying! 


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