It recently came to light that the Federal Reserve gave secret loans of more than $1.2 trillion to more than 300 financial institutions to keep them from collapse. Add on another $700 billion from TARP, and that was $2 trillion pumped into the financial sector in the last four years. The massive broad-based infusion of money worked from the aspect that the system did not collapse like it would have on its own.
Laughably, Bank of America may still need to be bought out to avoid collapse, at the potential expense of $100 billion in taxpayer dollars!
Now, what’s maddening about this is that the bailouts worked. It resuscitated a system that deserved to die.
So, it was socialism, massive manipulation of the “private” market that saved the rich. But it’s capitalism for the rest of you chumps in the mortgage crisis!
The American oligarchy managed to briefly unite to bring rescuing welfare socialism to the financial sector, but can only find itself able to spend $20 billion in mortgage relief, despite mortgage debt being the largest contribution to household debt by far.
And the $20 billion is only thrown out as low hanging fruit so the Obama administration can cover the banks from investigations by state attorney generals not bought by the federal financial lobby.
The Obama administration has turned up the heat on Eric Schneiderman, New York’s attorney general, to go along with a proposed settlement with the nation’s largest banks over dubious foreclosure practices. Mr. Schneiderman should stand his ground in not supporting the deal. The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs.
The deal has been in the works for nearly a year, after the state attorneys general announced an investigation into a robo-signing scandal in which banks were found to have filed false foreclosure papers in state courts. It was widely believed that the scandal would lead to a broad inquiry into how banks inflated the housing bubble, profiting as it expanded.
The administration also says that the proposed settlement would require the banks to write down the principal balance on underwater loans. According to news reports, the banks are likely to pay around $20 billion in the deal. With 14.6 million homeowners owing $753 billion more on their mortgages than their homes are worth, how far does the administration think $20 billion would go? NYT
The mortgage crisis has been destroying the middle class since 2007. The Mortgage Relief Act was too small and voluntary. TARP was involuntarily. If a bank was selected, it got a bailout/loan with no interest. Somehow, foreclosures and mortgages aren’t as pressing. It’s only now that the Obama administration views unburdening homeowners of 0.2% of the mortgage debt owed beyond the worth of their homes, in return for indemnity in investigations into wrongdoing by banks. The Obama administration continues its championing of Main Street through mastery of balanced compromises…
The Obama administration is obviously attempting to shield the banking industry from investigations into its potentially illegal activities related to packaging and and marketing mortgage securities like the robo-signing scam.
Referring to Obama as the lesser of two evils for the 2012 election was not a phrase I thought I’d be using in 2009.