But home ownership as the linchpin of the American Dream has proved to be one more feeble, rotting illusion, imploding through the speculation of the global financial system. Hotten did not foresee derivatives, collateralized debt obligations and subprime loans. The banksterism of the robber barons culminating in crash of '29 and the Great Depression was at least partially ameliorated by Glass-Steagall and the New Deal recovery programs -- and then World War II, followed by a tax rate on the wealthy approaching 90% during the Eisenhower years that gave birth to the middle class. Home ownership was taken for granted.
Fast forward to the repeal of Glass-Steagall during the Clinton years and a resurgence of casino banking and the crash of '08. Safe as Houses? What a cruel joke that turned out to be.
The New York Times today is running a rather lengthy piece by Binyamin Applebaum in the form of an Obama Apologia. Three-plus years in office, and the president is now admitting his administration didn't do enough to help keep people in their homes. Maybe it started to dawn on him that he could have done more when his campaign operatives began having trouble tracking down the people who voted for him last time. Disconnected phones with no forwarding addresses hampered Team Obama's outreach efforts. Minority voters he'd taken for granted were nowhere to be found. Millions of families had been evicted by the same banks the government gave a pass to. And so, says The Times, the president is now "haunted" by his slow response to a humanitarian crisis. The article doesn't say much about how haunted the foreclosure victims are by their own fate. It doesn't delve at all into the crony capitalism at the root of the crisis. And now, the president's re-election is in jeopardy. Waaaah. (Yves Smith has a good smackdown of both the article and the Obama housing policies here.)
In any case, the sudden regret of the White House is just so much bullshit. One novel solution to the housing crisis that's been getting a lot of press lately is the eminent domain option. A handful of local governments, most notably in California and New York, are fed up with the inaction from Washington and aim to take matters into their own hands. They want to wrest control of the mortgages of underwater homeowners in their communities from the predatory banks.
This plan, of course, has the financiers of Wall Street howling with rage. Rahm Emanuel, Obama's former chief of staff and now mayor of Chicago, has given it a big thumbs-down. Treasury Secretary Timothy Geithner has given it his usual wishy-washy passive aggression. In other words, the White House will again pretend to mull it over while doing nothing. From The Hill:
This is just completely against what is the national interest in terms of mortgage finance,” said Chris Killian, a managing director for the Securities Industry and Financial Markets Association (SIFMA). “It’s just completely wrong in our view.”
Joseph Pigg, vice president and senior counsel in mortgage finance for the American Bankers Association, said the idea could have “devastating” consequences.
“If they were to exercise eminent domain, you’re going to just completely destroy the securitization market,” he said.These guys are completely and appallingly convinced that the only interest in this equation is their interest. And you can bet they have the full faith and credit of Geithner and Co. These are people who regret rien. Empathy is sorely lacking in their DNA. But aren't you grateful for your American freedoms anyway?