“I‘ve got a sick feeling in the pit of my stomach — a feeling that America just isn’t rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. And the worst are, as ever, full of passionate intensity, oblivious to the grotesque failure of their doctrine in practice.”
That was economist Paul Krugman, in his Feb. 2 New York Times column, Failure to Rise.
We share Krugman’s dyspepsia, as evidence piles up that Obama administration economic-recovery measures are too timid and too accommodating of those responsible for the mess we’re in.
We learned at the beginning of the month that June unemployment was up to 9.5 percent, a hemorrhage of 467,000 more jobs.
Now, there’s this:
The Obama administration’s $50 billion program to curb foreclosures isn’t working, and the White House knows it.
Administration officials blame the mortgage servicers charged with carrying out the mortgage modifications and refinancing under the federal program. Many of their Democratic allies on Capitol Hill back them up, but others are criticizing the White House for fumbling the execution.
Whatever the reason, the program hasn’t stopped the rising tide of foreclosures: Experts predict that at least another 2 million homes will be lost this year, and the administration’s plan has so far reached only about 160,000 of the 3 million to 4 million homes it was supposed to protect over the next three years.
At some point — maybe after angry voters take back Democrats’ long-sought majorities in Congress next year — lightbulbs will finally go on above some heads at 1600 Pennsylvania Ave.: The Grinch won’t leave your Christmas alone because you were nice enough to put milk and cookies out for him.
Meaning, Republicans have no intention of meeting President Obama halfway about anything.
Meaning also that the financial industry has no intention of risking, much less giving up, even one dollar because doing so would serve the national interest.
If Obama thinks banks, other mortgage lenders and servicers are going to do the right thing because he asked nicely and the nation is depending on them, he’s dangerously naive.
Alas, it appears our new president has surrounded himself with people just as dangerously naive.
The White House realizes the stakes. Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan took the 27 participating servicers to task in a July 9 letter to their CEOs, telling them to add more staff, improve training, create an appeal path for borrowers dissatisfied with the service and fulfill other measures to do more modifications, better.
The servicers were told to designate a liaison with the administration who will meet with Treasury and HUD on July 28. The servicers have to tell the administration by July 23 what specific steps they’re taking to improve performance.
In addition, the administration announced that next month it will start publishing company-by-company results, including how many modifications each servicer has made and how quickly. At the least, that will give policymakers ammunition to shame recalcitrant lenders.
Wow, Geithner and Donovan sent the slackers a letter. Gee, the servicers have an appointment to explain what they’re doing. OMG, the White House is going to publish results, or the lack of them.
Next step, if the output of mortgage modifications doesn’t speed up: somebody’s going to have to stand in the corner!
What Obama ought to do is summon the CEOs of the mortgage servicers to a meeting with him at the White House. At that meeting, the president should tell those CEOs they have 120 days to double the number of mortgage modifications — and drastically reduce foreclosures.
“And, ladies and gentlemen, here at the federal government, we’re going to use the next 120 days to set up a new unit at Fannie Mae to do mortgage modifications for you, just in case you fail to double your output. If that happens, Fannie Mae will do the job for you — and send you the bill for services rendered once the job is done.
DO YOU UNDERSTAND?
Here’s the real problem S.W. and I see it in my own neighborhood right now. You can give a modifications but with the rising unemployment rate how are the banks going to come close to breaking even? The amount of home value loss has been around 40%. Unless that amount can be written off somehow then nothing will change. Even Fannie Mae wouldn’t be able to solve that problem.
This is by the way this was Bush’s fault. Barney Frank pointed this out just recently. He said that Bush wanted everyone a homeowner. Frank pointed out that not all people could afford to own a home and should rent but as he was outnumbered by republicans the laws were changed and the push for subprime was on.
Some writeoff will be necessary. Some home purchase deals won’t be salvageable. But many can be saved through a combination of extending the mortgage, reducing payments and adjusting the interest rate. In some cases, where the buyer has done everything right and is making his/her best effort, the government can take over a portion of the loan at nominal interest. That could be especially helpful to those who only got behind in payments recently because of jacked-up variable-rate interest and/or layoff(s).
Where there’s a will there’s a way. Believe me, it’s in everyone’s interest to not have another 2 million people foreclosed on. That affects all of us negatively.
It’s definitely time to stop accommodating the Republicans — on health reform, the mortgage crisis, and every other economic issue. Like you said, they have zero interest in meeting Obama halfway on anything.
And the Republicans became the minority party for a reason. First-string players don’t consult the people sitting on the bench; and the Republicans are on the bench right now.
No more milk and cookies for the Grinch. (I liked your analogy.)
Tom wrote: “. . . Republicans became the minority party for a reason.”
The 2010 election will be a test of the public’s attention span and memory capacity. It could also be an exercise showing who voters are most disgusted with on election day. That’s something the White House and congressional Dems should keep in mind.
I see the MSM is pushing the idea that a majority of people are unhappy with Obama’s healthcare plan. I haven’t checked but I’d like to see who did their polls. I smell a rat here.
If by some chance the republicans win in 2010 we know what they’ll do. They’ll lower taxes one more time on the wealthy and the rest of the country will suffer. Then of course they’ll blame it on the democrats. But if history repeats itself which I’m hoping it will then more of the republicans will be headed for the exits in the next election. Same thing happened during FDR’s term.
I smell a rat, too. The radical right still has its friends in high corporate places. I worry about a more recent precedent: 1994, when the public turned on Democrats in a big way, leaving us to the mercies of Gingrich, DeLay, Abramoff, etc.
Made contact with the Loss Mitigation Department at Suntrust and spoke to a Consoler and was told that the program set up by Fannie Mae and the Federal Government was not functioning. So the modification that I was offered can not be granted at this time. This offer was to extend my loan for 40 years at 2% Interest for the first 5 years going up 1% each year after until year 8 and would set at 5.375. A forbearance of 70k would balloon at the end of 40 years. This would bring our payments down $1,400.00 a month. The only offer they can give me is a 6 months forbearance that I would have to pay 1/2 on the mortgage thus causing me to accumulate late fees and interest. I was told by we could come up with more money so that they did not have to do such a large forbearance she could run the numbers again to see if we qualify with out the MPV test. I told her that I’m willing to take drastic measures to save the roof over my families head even if it mean I had to go out and find a loan shark to borrow the money from and have my leg broken if I can’t repay them or loose a kidney. It is unfortunate that I am left with no other choice in saving the roof over my families head.
James, don’t just take the word of that consoler at Suntrust about whether the Fannie Mae or some other federal program is “not functioning.”
Contact your U.S. representative and at least one Senator. Tell them you’re desperately trying to hang on to your home. Tell them what the consoler told you. Ask them to please find out if the Fannie Mae and/or other mitigation programs are functioning or not. If the answer is that they aren’t functioning, ask for an explanation. Also, ask for a suggestion of where you can turn for federal, state or private help to straighten out your mortgage situation.
I hope this will help you keep your home. At the least, your members of Congress should know the situation you’re facing, and how you are not getting effective help.