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View Diary: Vanity Fair Must-Read: “The 1 Percent’s Problem,” by Joseph Stiglitz (222 comments)

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  •  Here it is (15+ / 0-)
    Here’s Barney Frank, in an exit interview recently in New York Magazine, revealing unwittingly that Obama during the transition rejected a Bush administration concession to write down mortgages.  Here’s what Barney said.

       

    The mortgage crisis was worsened this past time because critical decisions were made during the transition between Bush and Obama. We voted the TARP out. The TARP was basically being administered by Hank Paulson as the last man home in a lame duck, and I was disappointed. I tried to get them to use the TARP to put some leverage on the banks to do more about mortgages, and Paulson at first resisted that, he just wanted to get the money out. And after he got the first chunk of money out, he would have had to ask for a second chunk, he said, all right, I’ll tell you what, I’ll ask for that second chunk and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it.  This is now December, so we tried to get the Obama people to ask him and they wouldn’t do it.
    This is consistent with other accounts.  There were policy debates within Obama’s economic team about what to do about the mortgage crisis.  The choices were to create some sort of legal entity to write down mortgage debt or to allow the write-down of mortgage debt through a massive wave of foreclosures over the next four to six years.  He choice the latter.  That choice was part of what led to roughly $7 trillion of middle class wealth gone, with financial assets for the elites re-inflated.
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