TINKERING
WITH T.A.R.P.
PART 1 of 2
By
Jon Christian Ryter
September 12, 2012
NewsWithViews.com
Barack Obama spent the last 45 months blaming former President George W. Bush for the bad economy. And because he has no record of his own to run on, Obama will campaign for the next 60 days or so on the slogan "It's Bush's Fault." But is it? Granted the subprime mortgage industry, which caused the financial meltdown in the United States that was created on Bill Clinton's watch, collapsed on Bush-43's watch. However, if you follow the dots back far enough you will discover that it is, in reality, Obama's fault since his community activism in Chicago engineered the subprime mortgage debacle by convincing some politicians that generational welfare recipients should be able to enjoy the dream of home ownership although they lacked the credit worthiness to qualify for a mortgage. With the help of former President Clinton, Jimmy Carter's Community Reinvestment Act of 1977 (Public Law 96-128, 91 Stat 1147, 12 USC 2901) was amended in 1993 to loosen credit standards for minority home buyers, creating what became the subprime mortgages of 1999-2005.
So, while Obama blames the current financial meltdown and the skyrocketing unemployment that resulted from it on Bush-43's watch—much the way Herbert Hoover was blamed from the Stock Market Crash on Oct. 29 which was deliberately orchestrated by the princes of industry and the barons of banking to take the United States off the gold standard. Hoover, a trained engineer and one of the best administrators in the country, was blamed for the Great Depression by the far left academicians who are the caretakers—and revisionists—of history. Hoover's recession and Hoover's depression were caused by Franklin D. Roosevelt for trying to spend his way out of a recession. Today, that's Obama's problem. You can't spend your way into prosperity using borrowed money.
The gamebook the completely inexperienced and totally inept Obama is using to spend his way out of this recession was written by FDR 79 years ago. History proved FDR's solution didn't work. Why? Because it's humanly impossible to spend your way into prosperity. The wealth you possessed is transferred to whomever buys your debt bonds. In this case, that would be China.
History assigned the blame for the Great Depression to Hoover simply because the academicians who chronicle who did what, said he did. In their world, you always blame the other guy because the problem started on his watch. FDR's spending changed Hoover's Recession into a Depression so severe it took a world war to bring us out of it. Why? Because you can't buy your way out of a Recession. But you can buy your way into a Depression. According to CBS News, Obama is increasing the national debt by $573,160,162, 546.29 a month. What's more, Obama is on a printing spree unmatched since the Weimar Republic decided to pay off its World War I war reparations with money backed by nothing except paper and ink since Hitler, like Obama, made the banks buy his Treasury Notes with the same hyperinflated dollars he was creating.
What caused the hyperinflation in Germany was a provision in the Treaty of Versailles which ended the war. The Treaty mandated that the Weimar Republic pay off its war debts with gold, silver or foreign currency, but not German Marks (fearing precisely what happened). When Germany began buying foreign currency with German currency, the value of the Mark plummeted, causing a need to print more German Marks. The rest, as they say, is history. Obama has already started down the same road traveled by the Weimar Republic—which, by the way, led Germany to Adolph Hitler. Only, the United States is not paying off war reparations but economic reparations. And the debt holder is the People's Republic of China.
What is interesting about Obama's Debt is that the total accumulated historic unpaid national debt when Obama was handed the key to the Oval Office was $10,699,804,864,612.13. In three years, the Obama-Pelosi-Reid spending cartel increased the national debt by another $5,300,736,228,779.78. It took the country 225 years to accumulate a debt of $10.7 trillion. In 3.5 years, Barack Obama added 50% more, bringing the debt your children, grandchildren and great, great grandchildren will be expected to pay to $15,990,541,092,391.91 [the national debt on Sept. 2, 2012. That debt now exceeds $16 trillion.) Who got the money? Add Walmart "smiley faces" to the photos of a lot of investment bankers and a lot of watermelons (businessmen and environmentalists who are green on the outside, communist red on the inside) campaign, contributors and bundlers whose quid pro quos from the Obama Administration make it a certainty that they won't ever have to worry about their children going to bed hungry, or experience the fear of having their summer homes or winter chalets foreclosed because they can't pay the mortgage.
Each year you—Mr. and Mrs. Taxpayer—are forced to pay the Federal Reserve a little over $150 billion in interest on that debt. When Barack Obama promised the American people "change," it was the one campaign promise he kept. Obama changed the fortunes of every man, woman and child in this country—and none for the better because at the end of the month, when the bills are paid, most Americans find all they have left—if they were able to pay all of the bills—is pocket change. A select few are now better off. Bankers, industrialists, and the Marxist greenies who bankrolled Obama's 2008 election campaign. Solyndra was one of them. The California-based solar panel manufacturer tried to get a low-interest loan from the Bush-43 Administration but it was failing worse than Hillary Clinton's presidential campaign. Bush-43 Energy Secretary Sam Bodman turned them down.
After 20 visits to the Obama White House to remind Obama that Solyndra shareholder and Obama bundler George Kaiser had invested hundreds of thousands of dollars in his campaign, Obama's Energy Secretary Steven Chu gave them $536 million in taxpayer funds from the stimulus slush fund that was supposed to be used to save the homes of downsized American workers. Obama's quid pro quo to Solyndra put close to 25,000 Americans in jeopardy of losing their home. Giving TARP money to General Motors and Chrysler probably cost another 74,000 taxpayers their homes. But, don't worry. GM paid off their $14 billion loan. Early. Not from their stellar automotive sales. From dollars from a $35 billion second stimulus loan from Treasury that followed the first one. GM, like the nine largest banks in America, was simply too big to fail. The taxpayers are not. They're expendable.
When the Pelosi-Reid 110th Congress enacted TARP, a process completely lacking any semblance of bipartisanship since Pelosi arbitrarily eliminated Republican participation in the process simply because she could. Controlling every phase of the reconciliation when the House and Senate meet to iron out the differences between House and Senate bills, Reid and Pelosi made sure the Democrats left enough loopholes in the stimulus language that the bankers and bureaucrats in Treasury could easily drive their limousines through them.
The first part of TARP committed $350 billion to buy up foreclosed homes whose worthless paper was held by community banks and mortgage loan companies. Under the law, the properties would be surrendered to the Resolution Trust Company who would be charged with the responsibility to dispose of foreclosed properties in such a way that those millions of homes would not negatively impact the real estate market. Taking those mortgages off the books would free up not only mortgage money for future home sales, but loan modifications for downsized homeowners struggling to save their home in a faltering economy. It would free up dollars for consumer credit to keep the economy growing. Specific language to "offer" home loan modifications to between 3 to 4 million homeowners was in the bill. But, the language in the legislation that was signed into law did not appear to require banks to approve loan modifications for any of those who applied for them—only offer them. The banks took that provision literally.
It was interesting how easy Obama made it for banks to apply for, and receive, TARP money. The government eagerly jumped into the deep end of the pool to help banks. But they were reluctant to even tiptoe into the shallow end of the pool to help those whom TARP was actually enacted to save. The Democrats appeared afraid that if they actually modified any mortgages for homeowners in trouble, the following year, 2010, the Republicans would coin the HAMP (Home Affordable Modification Program) equivalent of "welfare queen"—to describe those who applied to Uncle Sam to refinance homes with loans they might not otherwise not qualify for. The Democrats feared the Republicans would say that homeowners flocked to apply for loans so they could add a swimming pool or remodel the garage into an extra bedroom or family room and then have their mortgage modified by the taxpayers.
HUD issued a report on Dec. 31, 2011 trumpeting their success in helping American families through HAMP. HUD claimed they had "helped" 1.5 million families in jeopardy of losing their homes. In reality, after two years, only 646 families had been helped by the HAMP program through HUD.
A year earlier, in October, 2010, looking forward to a tough election,. the Obama Treasury Dept. issued an internal memo called a "Two Year Retrospective" which claimed the modification program was a success because there were nearly 700 thousand failed trial modifications compared to just 467 thousand permanent modifications. It was the view of the US Treasury and the banking industry that since the law did not spell it out fully, the Troubled Asset Relief Program was designed only to offer homeowners "temporary" modification programs, not permanent mortgage modifications. Treasury seemed to believe that every family that received a "trial modification" had benefited sufficiently by having their mortgage payments temporarily reduced. What the Obama Administration, under Treasury Secretary Timothy Geithner, was doing, according to the Special Inspector General for TARP's [SIGTARP] Neil Barofsky, was "...foaming the runway for the banks" by delaying consumer foreclosures until the banks could fiscally handle them without making themselves insolvent. Geithner used HAMP as a "grace period" devise to temporarily stave off foreclosure, not permanently abate the effort to do so. Funds allocated to HAMP modifications were used to lower the homeowner's mortgage while they were "considered" for permanent modification.
By doing that, the banks profits three ways. First, when they foreclosed on the homeowner, the bank sues the foreclosed homeowner for the delinquent payments plus interest and penalties—a debt the homeowner is obligated to pay if he or she ever intends to own another home. Second, HUD reimburses the bank or mortgage company for its loss (i.e., the taxpayers do that); and finally, the bank sells the house to the Resolution Trust Company or to real estate speculators who will likely convert those homes, for the moment, into rental property. The only people who lose are those that TARP and HAMP were created to help.
The pledge on the US Treasury's website which described HAMP as "...a $75 billion loan modification program to help up to 4 million families avoid foreclosure," should have read: "A $50 billion loan modification program to help up to 4 million families postpone foreclosure." In reality, when SIGTARP head Neil Barofsky resigned as Tarp's Inspector General in 2011, only $1 billion of the $50 billion or $75 billion (depending on whose pocket calculator you're using) had been spent to help the taxpayers save their homes.
Over half of those who applied for loan modifications were ultimately declined. When the homeowner was rejected, usually after living with a trial modification for upwards of a year, two things happened. First, the homeowners discovered their homes were already in foreclosure; and second, the homeowners also received a default notice from their mortgage company for a lump sum payment for whatever amount they were originally behind in their mortgage payments, plus interest, and a demand for the difference between their original mortgage payment and the modified amount plus interest, during the "trial" modification..
In the Special Inspector General for TARP's report to Congress, Barofsky referred to Treasury's claim for what it was—"a cynical attempt to define failure as success." Barofsky further noted that "...although HAMP had around 523,000 ongoing permanent modifications by the end of 2010, the housing market was still hemorrhaging with 2.9 million homes receiving foreclosure filings, and the banks repossessing more than one million homes, building off of the historic numbers in 2008 and 2009."
Banks foreclosed on 820,000 homes in 2008 and 918,000 homes in 2009. One million five thousand homes were seized in 2010. During that same period, 250 thousand foreclosures were halted by the federal government's investigation into fraud by lenders in not properly notifying homeowners they were in jeopardy. In thousands of cases, allegations that unethical foreclosure companies had signed the homeowners' names to foreclosure documents were levied by attorneys for the homeowners fighting to protect their homes. In several cases, the mortgage holders were fined due to evidence uncovered by SIGTARP.
Neil Barofsky, who is a lifelong Democrat and was a superstar prosecutor before being tapped for the job of Special Inspector General of TARP, told the Senate Finance Committee on April 20, 2010 that "...to declare TARP a success..." (which Treasury did) "...is revisionist history. TARP was supposed to restore lending. That didn't happen." For Democrats, it's much simpler to ignore the factual truth and find an alternative reality which you can claim you achieved.
In Barofsky's view, the federal government made a commitment to the American people through the Troubled Asset Relief Program to [a] help homeowners by forgiving part of the principle on their mortgage notes based on the current deflated street value of those homes; and [b] to help downsized-homeowners get lower mortgage payments through lowered interest rates so those families would not lose their homes. Not only did that not happen, the Treasury under Timothy Geithner was even less transparent than the Obama Administration as a whole. Congress had already committed $2,189,000,000,000.00—that's trillions—to saving Wall Street.
In doing so, Obama converted a recession that had actually rebounded in July, 2008, into a financial crisis that threatened to collapse not only the US dollar but every currency in the world. According to Barofsky (page 162 in his book) the Fed reportedly loaned the banks "too big to fail" another $4.7 trillion in direct loans. In the end, when the chips are cashed in, we will discover that the banks "too big to fail" now have $8.5 trillion in assets, and they are 28% larger than they were before the financial crisis began (56% of the nation's annual output, up from 43% when the financial crisis began).
| Subscribe to the NewsWithViews Daily News Alerts! |
According to the Housing and Economic Act of 2008's whose key advocates, Sen. Chris Dodd [D-CT] and Congressman Barney Fran k [D-MA], TARP was a commitment to help homeowners escape toxic mortgages and provide those in jeopardy with venues that would help them save their family homes. That's how the Democrats got the bill passed. However, Obama Assistant Treasury Secretary Herb Allison who was appointed by Obama to oversee TARP, made the claim to Barofsky that TARP "...had never been intended to help the 3 to 4 million homeowners that [Obama] cited in his speech announcing the program [to allow homeowners] to actually stay in their homes through permanent modifications. Instead, he said, the goal [of HAMP] had always been to make 3 or 4 million offers for trial modifications. That claim of such a meaningless standard for HAMP," Barofsky said in his book, BAILOUT; How Washington Abandoned Main Street While Rescuing Wall Street, " seemed particularly callous given the damage being done by the worsening foreclosure crisis." For part two click below.
Share
This Article
