What could Obama do, starting today?
He could immediately push to give bankruptcy courts the power to force banks to readjust these mortgages. We the taxpayers bailed out the banks. So why shouldn't they in turn be compelled by the federal government to return the favor by helping taxpayers who are now stuck with a house worth less than what they owe on their mortgage? As already mentioned, abandoned houses bring down the value of all surrounding houses, underwater or not, so everyone would thereby be helped.
The Tea Partiers yell about "getting the government off our back." But this government did not get big (and the debt did not rise as high as it is) due to the fact that we're trying to help firemen or school teachers keep their jobs. It happened because we have, through the Fed and through the federal government, committed three or four trillion dollars to bail out the banks.
Therefore Obama should call for a moratorium, for two or three years, on mortgage foreclosures. He could call for, and push through legislation, that would allow people to stay in their homes. The goal would be to prevent all those boarded-up buildings in the suburbs of South Florida, Riverside, California, and elsewhere.
If you travel in this country and look closely, you'll see that there's enormous pain stemming from the fact that people's life savings as well as their sense of their worth, their piece of the American Dream, were tied up in their family home. When you lose that home or when you're facing foreclosure, you lose not only your pride, you lose your ability to retire and/or to send your kids to college. The dreams of Americans are wrapped up in their home. And I don't know why we're talking about anything else right now. If we want to get the economy going again, if we want to get people back to work, if we want to get consumption up, what you've got to do is help people with their nest and their nest egg, which is their home. And so far there's precious little in Obama's speeches, and certainly almost nothing in his actions, to help those homeowners in that way.
Fannie Mae and Freddie Mac were as rapacious as Citigroup or Goldman Sachs. People like Barney Frank and even many in the Black Caucus, said, "No, no, don't touch Fannie Mae and Freddie Mac because they're going to help poor people get into homes." Sure, a lot of minorities got into homes, but many of those homes were lost to foreclosure. So now, as a result of such a bad investment, plenty of folks have lost their life savings (to the banksters and Wall Street sharpies).
If we can't stop housing foreclosures, if we can't stem this bleeding right now, we're simply not going to get consumption and spending back, and so we're not going to get anywhere near enough jobs back -- jobs in construction, and jobs generally. Therefore one should not divide the interests of homeowners (and keeping them in their homes), from the interests of the rest of the population.
Has Obama done anything different about the economy than Bush?
Obama has been a disaster. Perhaps if he appoints Elizabeth Warren to the new consumer protection agency, there will be a bit of value in this new regulatory agency. Problem is, there's a quiet campaign in the White House and at the Treasury Department, among people like Wall Street guardians Rahm Emanuel and Tim Geithner, to prevent her from getting this appointment.
Unfortunately we can't look to the Democratic Party, hacks that they are, for leadership on this. First of all, most of these people are veterans of the Clinton administration and are the same people who destroyed Brooksley Born, who was one of the most competent lawyers in this country in dealing with banks. She understood more about derivatives than anyone around, and she was appointed to what was supposed to be a lesser agency, the Commodity Futures Trading Commission. Seventeen times, in testimony before congressional committees, Brooksley Born sounded the alarm that there was going to be a housing meltdown, that this whole thing had gone wild, and that we had inadvertently enabled Wall Street graft and corruption. It's people like Summers, now firmly entrenched in Obama's administration, who don't want Elizabeth Warren--Timothy Geithner for instance, and there are plenty of others. There are many Goldman Sachs veterans and other big Wall Street veterans entrenched in Obama's administration. They destroyed Brooksley Born and now they feel threatened by Elizabeth Warren because Elizabeth Warren all too competently represents consumers. She's a brilliant legal mind who scares them just as Brooksley Born did. Elizabeth Warren said, "Wait a minute, what kind of government is it when you're caring about Wall Street and you're ignoring the pain out there on Main Street?" And banksters don't want to hear that kind of talk. They want unprotected consumers in the millions who they can then more easily prey upon en masse, and profit from, obscenely. Their successful predation and the growing wealth that stems from it depends on having consumers remain unprotected. And nothing else matters to them. Therefore Elizabeth Warren must be stopped. Discretely stopped, but stopped.
These folks on Main Street invest their whole life providing shelter and all manner of other basics for their family. And when you go out in these communities, it's so very depressing. There are people in Riverside, California who diligently cleaned office buildings 50 miles away in Long Beach. They commuted every day from Riverside so their kids could live in a better neighborhood. They bought their affordable house in a nice neighborhood, worked hard, and reliably made the payments month after month. They did everything they were supposed to do. And then they lost their jobs to low-wage workers from south of the border, mortgages started getting foreclosed and the neighborhood went to hell, and they eventually lost everything. And that story is being repeated millions of times across America, as the wealth holdings of the banksters and CEOs multiply into the stratosphere.
And the guys who did this to America, they weren't those vicious right-wingers. It wasn't all the people that we liberals like to attack. It was our friends! Let's get that straight: This was a product of the Clinton Bubble. It was our friends who helped make it happen. It was people like the heads of Fannie Mae and Freddie Mac, who identify themselves as liberal Democrats. But they were being rewarded with enormous bonuses. (In fact they made out just as well as the people running Citigroup.)
As for Fannie Mae and Freddie Mac, these were not government agencies. These were companies whose shares traded on the stock market, yet they posed as government-supported agencies. And the fact of the matter is that the damage that was done to America was done by people who talk a very good game. Robert Rubin contributed money to the Harlem dance group. Jesse Jackson was one of those who supported the reversal of Glass-Steagall. It was the Clinton Democrats (who now run the Obama administration) who turned the hen house over to the foxes. And the record of Obama on this has been abysmal. He has essentially been a front man for Wall Street. Why? Because he thinks he needs their money to get re-elected in 2012.
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