New York Attorney General Eric T. Schneiderman has been pulling a Spitzer, going after the corrupt banks that the administration prefers to slap on the wrist. Obama wants Schneiderman to agree to a deal which would more-or-less forgive the banks for their mortgage schemes that brought the world's economy to the brink. Yves Smith
Revealingly, one of the Administration’s allies said: “Wall Street is our Main Street.” And the worst is that this remark may not be a cynical Ministry of Truth pronouncement. Team Obama bears all the hallmarks of being so close to banks and big corporations that it has lost all contact with and understanding of mainstream America.
A member of the Administration who was involved in the settlement talks confirmed what we have long said on this blog: there was no investigation of any kind, despite Iowa attorney general Tom Miller’s [lies] claims to the contrary. They didn’t even bother getting to first base, namely making document requests.
And that is why at least some of the AGs are so uncomfortable with what is going on.
For her part, Marcy Wheeler
says that this settlement will be "the last nail in the coffin of the rule of law in this country." I think there are rather more nails yet to be pounded, but I take her point. Marcy links to this important piece
by David Dayen of Firedoglake which demonstrates that a real solution to housing might create one million new jobs -- and it would keep people in their homes. The trick is simple: Refinance existing loans, reducing the principle.
That, as I recall, is pretty much how FDR did it. In the end, the agency he set up for that purpose, HOLC, broke even.
Dayen draws, in turn, from this report
by a group called The New Bottom Line. They say that their plan would lower underwater mortgages by $500 a month. Dayen:
So it’s not really an outrageous number, or a way to give people “free homes.” It’s helping out people who were ripped off or through no fault of their own bought mortgages at the wrong time from the wrong people. And remember, there practically is no legitimate mortgage market, given all the shenanigans in securitization from the banks. This should be the bare minimum fix just to make the system legal again.
The NBL report says, basically, that underwater homeowners owe $700 billion more than the homes are worth. This is from the report itself:
If banks wrote down the principals and interest rates on underwater mortgages to market value, it would save homeowners $71 billion per year.Banks received $14 trillion in taxpayer-funder bailouts and backstops so that they would start lending to the American people again to jumpstart the economy. That never happened. While some of this money has been paid back, much of this $14 trillion has not and will never be returned. They should just subtract this $709 billion oﬀ the trillions they still owe us.
$709 billion is a fraction of the trillions they took, and it would go a long way towards reviving the economy. Further-more, the bailout money was also intended to cushion the banks from losses on their toxic assets -- a technical term for “bad loans.” We gave them money so that they could write down bad loans without going under. It only makes sense that they now write down underwater loans.
Let's repeat this. Part of the rationale for the big investment bank bailout in the first place was to help the banks deal with bad loans. The bankers were happy to take the money. So why can't they live with a quid pro quo?
Alas, libertarian propaganda has so thoroughly brainwashed our population that even people now living in their cars would probably disdain any "big gummint" solution that would make mortgages more affordable.
Obama no doubt hopes that, by laying nice with the Wall Streeters, they will give him the same kind of loot they gave him in 2008. But they hate
him. They shouldn't hate him (arguably), but they do.
Traditionally, banks do not want foreclosed homes. Frankly, there are times when I think that this entire crisis was engineered to allow certain capitalists to scoop up lots of cheap properties.
You know -- sort of like the early 1990s, when Russian sleazoids bought up everything in the former Soviet Union for pennies.
Speaking of propaganda:
I never thought I would see the day when Republicans openly ask for a tax increase on the working class, but that's now their agreed-upon position -- going into an election year. God damn
but they are cocksure of their abilities to control the narrative through propaganda!
Meanwhile, the Republicans denounce Obama's stimulus -- which was largely a matter of tax cuts (of the wrong sort -- that is, not directed at the wealthy). Yet the Republicans are thought to be in favor of lowering
taxes, and Obama is widely perceived to have raised
Perception is at a 180 degree variance from reality. When does it become time to declare the country ungovernable?
Jon Stewart, in a recent bit, noted that if the Republicans took half
of the earnings of the lower-class wage-earners, the haul would come to about what we would get if we returned to "soaking" the rich at a Clinton-era level. If we returned our tax structure to those much-higher, long-gone Reagan
-era levels, our problems would disappear.
Am I the only one who recalls that, throughout much of the Reagan era, George Will routinely pronounced America to be "under-taxed"?