Thursday, August 26, 2010

Treasury says failed foreclosure program OK since it saved banks

Posted By on Thu, Aug 26, 2010 at 3:17 PM

The Treasury Department, run by Tim Geithner, aka the man who manages to be hated by both left and right, had a plan to help homeowners avoid foreclosure. A lot of people worked hard, interviewing homeowners around the country, and for a while, it looked as if we might actually see a government program do something significant to help struggling, ordinary Americans. Now, however, as my dear dad used to say, that shit’s over. The plan has basically failed, and only a very small percentage of people eligible for help have received it.

Alternet has a startling story today that explains not only what happened to the program, why people who trusted the program have been largely screwed, and, perhaps most significantly, why the Treasury Dept. doesn’t really care.

Here’s the quick version: The program lowers monthly payments for borrowers, but without reducing their overall debt burden – in fact, often increasing that burden -- while funneling money to banks. According to admissions from top Treasury officials, though, that's all good, since the mortgage plan wasn’t really about helping borrowers. Instead, it was just part of a huge, overall effort to pump money into banks’ coffers, in order to save them from losses on bad loans.

In other words, the program has worked well enough to save a bunch of banks that had made bad loans, and if that result comes at the expense of most of the people hit hardest by the Great Recession, the Treasury Dept.’s attitude seems to be, “Aaah, you’re losing your house — that’s really a shame, isn’t it? Oh well, at least your bank’s doing OK now!” Gee, thanks, Secretary Tim. And thanks, too, Mr. President, for refusing to get rid of Geithner despite nearly everyone outside the White House or a corporate boardroom urging you to. And for the clueless out there, yes, that's sarcasm.

Geithner before Congress, with fan behind him
  • Geithner before Congress, with fan behind him

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