“President Obama’s $447 billion jobs plan got generally good reviews from economists on Friday, though several noted one glaring omission: The plan does not include a comprehensive way to address mortgage debt, which many see as the central drag on the U.S. economy,” says a front page story in today’s Washington Post. http://www.washingtonpost.com/business/economy/obama-jobs-plan-economist…
The headline could have been “No Kidding,” in that everyone has known for years that tens of millions of mortgages higher than the value of houses is a continuing bleeding sore that is killing our economy, jobs, families, communities and our country’s ability to recover from the financial crisis. “These economists say that while a stimulus can help, the main problem is the overhang of mortgage debt created by the housing bubble that was at the center of the financial crisis of three years ago.”
No one knows this better than Obama and the people who work for him. He and they have rejected any serious program to deal with this fundamental problem since early in 2008 during his campaign.
Why? For one really dumb reason: “The Obama administration says it is continuing to work on a plan to reduce the mortgage burden homeowners face each month — in particular by working with federal housing regulators to support more mortgage refinancings. But administration officials have rejected big proposals to cancel mortgage debt for fear of rewarding mortgage holders who borrowed far beyond their means.”
“For fear of rewarding mortgage holders who have borrowed far beyond their means” — seriously? Obama, his advisors, and his administration (working closely with the Fed) didn’t hesitate for a minute to spend trillions — yes TRILLIONS — of dollars to bail out Wall Street and the entire financial sector when the entire crisis arose largely because THEY “borrowed far beyond their means.” If they weren’t all grossly over-leveraged, the scope and scale of the crisis would almost assuredly have been manageable and there may well have been no crisis at all.
But, Obama and his gang all said, we must save our financial system and our economy no matter what Wall Street and the financial industry did. And, egregiously, not only did he save the banks, but he saved the bankers who ran the financial system and the economy into a disaster – needlessly making moral hazard bigger than it has ever been in the history of our country. How were they made to pay for “borrowing far beyond their means” and actually causing the biggest financial crisis since the Great Depression? They got to keep their jobs and their riches made from creating the crisis and they got to pay themselves billions in bonuses within 2 years of doing that!
Yet, he won’t help mortgage holders, many of whom are innocent ongoing victims of those very banks and bankers who he has coddled and saved. The fact that those tens of millions of mortgage holders are a drag on the economy and in some ways the biggest threat to his reelection is an irony probably lost on him and his team.
Just as they all so quickly overlooked the negligent if not criminal conduct of so many bankers, it’s past time for Obama and his administration to stop worry about helping some families who “borrowed beyond their means.”