A Black Agenda Radio commentary by Glen Ford
The Obama administration has repeatedly refused to spend moneys a set aside for distressed homeowners and communities. Why? Because banks have refused to cooperate with such programs, fearing that intervention in the housing market “would threaten to upset the bankers’ carefully calibrated market manipulations.” They would rather continue rigging the game. “The banks have been carefully dribbling out houses for sale, attempting to artificially stabilize prices with the goal of pumping up another bubble.”
Why Obama Won’t Help Foreclosure Victims
A Black Agenda Radio commentary by Glen Ford
“A real mortgage modification program serving millions of desperate homeowners would screw up the bankers’ game.”
The Obama administration’s failure to spend almost any of the $7.6 billion in TARP housing money set aside for the neediest regions of the country seems counterintuitive. Why let all but 3 percent of the funds just sit in the Treasury Department’s accounts for two years, unspent, when millions of the president’s most loyal supporters were struggling to maintain a roof over their heads?
The Hardest Hit Fund was specifically targeted to homeowners in areas most seriously impacted by unemployment and falling home values – a formula tailor made for Black and Latino communities devastated by massive foreclosures and layoffs. With the $7.6 billion already in hand, the administration could have won political points with its base at no cost. But instead, hundreds of thousands of the intended beneficiaries were allowed to lose their homes. What could Obama, or his Treasury Secretary, Tim Geithner, have been thinking?
The problem was, Obama’s people resisted putting the program into effect. A report by the Special Inspector General for the TARP program found that Geithner’s department hardly even tried to get bankers to cooperate with the Hardest Hit Fund. Instead of leaning on the banks to participate so that homeowners could take advantage of the federal help, the Treasury Department most often left it up to the states, many of which have little ability to influence banking institutions. Essentially, the Treasury Department behaved as if the program wasn’t there.
That’s quite similar to inspector general reports on the larger Home Affordable Modification Program, which President Obama promised would help three to four million homeowners, but actually assisted less than a million. With this program, too, the administration refused to pressure banks to participate.
“Wall Street doesn’t know how to make money anymore except through manipulating markets and inflating bubbles.”
The problem begins at the top. Obama has consistently protected bankers’ rights to deal with homeowners as they please.
Doing as they please means rigging the market. Wall Street doesn’t know how to make money anymore except through manipulating markets and inflating bubbles. Even though five or six million additional foreclosures are expected In the next couple of years, and millions of homeowners are technically in default, the banks have been carefully dribbling out houses for sale, attempting to artificially stabilize prices with the goal of pumping up another bubble. That’s a helluva trick, when the truth is that the banks are as deep in the red as the homeowners they refuse to help. However, the unleashing of billions of dollars in federal loan modification money to hardest hit areas would threaten to upset the bankers’ carefully calibrated market manipulations. The goal is to declare that the housing crisis has hit bottom, and the future is bright. But, the banks can only pull off this scam if the government allows them to foreclose properties and put them on the market at times of the banks’ choosing, and allows the banks to control the information on what’s really happening in the housing market. A real mortgage modification program serving millions of desperate homeowners would screw up the bankers’ game. So the banks resist federal intervention; the Obama administration betrays the homeowning public and leaves billions of housing dollars unspent; and millions of families are ruined.
For Black Agenda Radio, I’m Glen Ford. On the web, go to Black AgendaReport.com.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com .
This week’s featured author is Nick Nesbitt. Nesbitt is Professor of French and Italian at Princeton University. His book is The Price of Slavery: Capitalism and Revolution in the Caribbean.
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