A Black Agenda Radio commentary by Glen Ford
“The banks, acting as a cartel, are manipulating the housing market to force prices higher, for the sake of their own bottom lines.” Rigging the market requires a collaborative effort – and that the federal government stay out of the bankers’ way. President Obama is glad to oblige.
How Obama Helps the Banks Rig the Housing Market
A Black Agenda Radio commentary by Glen Ford
“They are attempting to stretch the crisis out over time to spare themselves from catastrophic lose.”
Mike Whitney, an economics writer that we at Black Agenda Report trust, wrote a piece
Whitney wonders how home prices could be rising, as they are, at the same time that housing sales are dropping, which they are. On the face of it, the two phenomenon should not coexist. Falling sales means declining demand, which is supposed to result in lower prices. But average home prices in the 20 biggest cities are rising faster than at any time in the last ten years. And yet, we know that huge numbers of homeowners are technically in default, and many millions more are stuck with under-water mortgages that they’d like to walk away from.
What Mike Whitney concludes is happening, is that the banks, acting as a cartel, are manipulating the housing market to force prices higher, for the sake of their own bottom lines. They have slowed the foreclosure process – not out of concern for the families that live in the houses, but to avoid flooding the market with newly foreclosed homes, which would further undermine housing prices and devalue trillions of dollars in mortgages held by the banks. Whitney, and others, believe that if the actual value of those mortgages were known, most, if not all, the big banks would be declared insolvent. Therefore, the banks carefully calibrate the foreclosure process, to make sure not too many delinquent homes are put back on the market at one time. They are attempting to stretch the crisis out over time to spare themselves from catastrophic lose. This is not a kindness; it’s called rigging the market, and requires a high level of orchestration among the top players. But that’s not so difficult, since all the big banks share the same interest in artificially inflated assets.
“If the actual value of those mortgages were known, most, if not all, the big banks would be declared insolvent.”
The banks are not saving homeowners from ultimate foreclosure; they have resisted writing down mortgages as if that would violate all the laws of Heaven and earth. But rigging the markets so that the impossible occurs – that is, rising housing prices in a low-demand market – requires fine-tuning. To succeed, the banks must collaborate with one another to keep too many distressed houses from flooding the market. Government intervention in the housing market and schemes to lower the principle on large numbers of homeowners’ debts could upset the bankers’ careful calculations. And that’s why the bankers’ great friend in the White House, Barack Obama, has refused to intervene in housing in any meaningful way. As a candidate, he rejected any type of moratorium on foreclosures or mortgage rate increases, and has maintained that position as president. His administration refused to spend more than $6 billion in funds provided by Congress to help the hardest hit homeowners in the country, almost certainly because that kind of intervention might upset the bankers’ delicate calibrations on how many foreclosed homes to dribble into the market at any given time, in order to boost prices. By doing next to nothing on housing, Obama allowed the banks free reign to continue rigging the market. They owe him, big time.
For Black Agenda Radio, I’m Glen Ford. On the web, go to BlackAgendaReport.com.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com .
The International Monetary Fund has a long history of insisting on loan conditionalities which are harmful to public services. This practice did not change even during the pandemic, with African…
Leftist formation wins Colombian presidential election, the effort to end involuntary servitude in U.S. prisons, the impeachment of a Black legislator in Brazil, and the nature of fascism and need…
Ajamu Baraka is National Organizer of the Black Alliance for Peace. He joins us to discuss the recent election results in Colombia where Gustavo Petro, became the new president, and Francia Marquez,…
Savannah Eldrige is the founder of Coaliton to Abolish Slavery in Texas, an organization devoted to ending involuntary servitude in that state. She is also the founder of Be Frank 4 Justice which…
Renato Freitas is a Black City Councillor in Curitiba, Brazil. He and others joined in national protests over the killing of Congolese immigrant Mugenyi Kabagambe, who was beaten to death after…
