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A commentator in a recent diary suggested I "stop whining" after perceiving an anti-Obama sentiment regarding recent EPA actions on the environment.  Although a life-long environmentalist and democratic party activist, I do recognize the importance of preventing the Republicans from taking over 3 branches of government.  At the same time, the Obama campaign needs to hear criticism from its base when such criticism is needed.  Environmental concessions in a perceived effort to solidify moderate votes is not news, agreed.  I do applaud the Administration for not including eastern Gulf of Mexico waters in its recent decision to reopen leases for oil and gas drilling.

There is another huge issue pending related to the title of the diary, and the Obama campaign needs to recognize the huge risk it is taking in following through with the AG Foreclosure Settlement deal.  Georgetown Law Professor Adam Levitin outlines the pros and cons of the deal and his anger is palpable.

The deal doesn't buy peace for the banks or stability for the US housing market.  It just blows the government's last wad on a sideshow issue, robosigning. Consider all the critical issues the settlement does not (and cannot) address:  
 •The $700B in negative equity in the US.
 •Clouded title from MERS
 •Clouded title from wrongful foreclosrues
 •Billions in investor putback and securities fraud claims
 •Investor suits against trustee banks
 •Disposal of the REO inventory and the shadow REO inventory

If the deal is to help the US housing market on a macro-scale, it has to take a major bite out of negative equity. $20B isn't even a scratch.

It gets better, take a look:

 He ends with a warning for Obama:

The Administration Only Gets One More Bite at the Apple

A final thought.  Yves Smith made a trenchant political observation at the AmeriCatalyst mortgage conference yesterday:  the Administration only gets one more bite at the apple in terms of getting the housing market right. If the Administration flubs this, as they have consistently flubbed the housing issue, by going small bore and trying to sweep problems under the rug, rather than addressing them, there are serious political implications. It doesn't take a lot to connect the dots between the multistate settlement and the deep national demand for accountability for the financial crisis that is manifesting itself in OWS and the need to take real action to deal with the housing market problems that are at the core of the US's economic woes.

I'm not sure where the Administration's political team is on this one, but imho, it seems like they are letting Treasury drive the 2012 campaign off the cliff via this settlement that will confirm the perception that the Administration works for Wall Street, not Main Street. And if you think I'm nuts on this, just read the first line of the NYT editorial:  "The banks want California, and the Obama administration hopes they can get it."  In a country craving accountability for the financial crisis and its aftermath, being cozy with the banks is the wrong place to be when approaching a general election.

read the rest here, and please share:

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Comment Preferences

  •  Tip Jar (5+ / 0-)

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Thu Nov 10, 2011 at 05:57:57 AM PST

  •  I took the title (2+ / 0-)
    Recommended by:
    splashoil, MKSinSA

    from this exchange in the comments section of the Levitin piece:  

    10.9 million homeowners is an awfully big pool of voters. Thanks for being the voice of reason while at the same time broadcasting your anger. Shared with my network...

     Posted by: fed up | November 10, 2011 at 06:17 AM

    "10.9 million homeowners is an awfully big pool of voters. "

    It is, but who are they going to vote for that will actually do better for them? One vote gets them basically bupkis, the other gets them less than bupkis. It's not so much a choice of getting reamed or not, it's how hot the poker is going to be when it happens.

     Posted by: MacCruiskeen | November 10, 2011 at 06:35 AM

    MacCruiskeen puts it extremely well. If the choice is merely how hot the poker, I think a lot of voters stay home or vote anti-incumbent.

     Posted by: Adam Levitin | November 10, 2011 at 06:56 AM

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Thu Nov 10, 2011 at 06:00:07 AM PST

  •  Settlement is a fraud. Better, (0+ / 0-)

    investigate and document a list of the:
    1) illegal foreclosures (including robosigning, lack of legal standing, etc.)
    2) illegal transfers of titles (all of MERS?)
    3) illegal predatory loans

    and then prosecute every single one. After a bit of this, a reasonable settlement figure might be negotiated. But, until there are legal actions, settlement is essentially ignoring the illegal actions of the finanical sector in the housing collapse.

    I voted with my feet. Good Bye and Good Luck America!!

    by shann on Thu Nov 10, 2011 at 06:16:48 AM PST

  •  No Banker Left Behind (1+ / 0-)
    Recommended by:

    Ry Cooder:

    The afternoon was sunny,
    and the weather it was fine.
    They counted out all our money,
    and no banker was left behind.
    They are all down at the White House,
    and no banker was left behind.

    This is President 1%'s mantra!

  •  Negative equity (4+ / 0-)
    Recommended by:
    kareylou, FG, MKSinSA, dnpvd0111

    How much of the negative equity in real estate is due to people cashing out equity over the years via the HELOC ATM machine? Much of that money went to pay off credit cards, i.e., consumer purchases of gewgaws. As the bubble continued to inflate, more paper equity was generated and people hit the ATM machines again to pay off their fresh credit card debt. Rinse. Repeat. Crash.

    I would hope that any proposal to "write down" negative equity would either exclude cases of such loans, or at least not ask the taxpayer to effectively fund these purchases, in lieu of perhaps the banks taking the hit.

    •  interesting article for ya... (1+ / 0-)
      Recommended by:
      One can name dozens of examples of things that violate our sense of fairness and obligation, and thereby make us all richer, from limited liability to bankruptcy.  But people most won't believe it.  Oh, they may believe the part of it that supports some larger "fairness" agenda they're committed to.  But their support is almost always piecemeal: try getting a liberal who loves easy bankruptcy to give a second chance to bankers who made a few stupid money decisions, or convincing conservatives who are avid for tort reform that debtors who ran up credit cards with unwise investments in expensive but rapidly depreciating motor vehicles and consumer electronics might also need legal protection from the fullest extent of their past mistakes.

      I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

      by route66 on Thu Nov 10, 2011 at 06:44:21 AM PST

      [ Parent ]

      •  Found a good graph (2+ / 0-)
        Recommended by:
        MKSinSA, dnpvd0111

        Showing HELOC debt outstanding through 2008:

        Oddly enough, it tops out at about $1 trillion, close to the current $700 billion in negative equity.

        If the government wants a Keynesian stimulus, it would be better to funnel billions directly into the hands of the lower class, not just those in a state of temporary and unthinkable embarrassment. Have no money and little debt (having no credit), they would be guaranteed to spend it almost immediately back into their local economy. Let the bourgeoisie rent.

  •  I'm getting a new housemate next week (1+ / 0-)
    Recommended by:

        A 58 year old man who has been working full time since he was 18, who bought a nice single family home in--2004? around then. He is underwater, but we are fortunate enough to live in a suburb of DC, so the recession is not as bad here as many places. He sold all his furniture except the bedroom suite, and rented out his house for a three hundred more than the mortgage. He is going to try to wait it out. And Lord knows I can use the rental income. That will be three unrelated adults and a business that 100 people a week visit in one small townhouse!!
         He said he was surprised at how good it felt, once he made the decision and admitted he just couldn't afford to keep all the stuff he had accumulated. He said he felt pretty Zen.
         I am not suggesting that as a solution for anyone. Certainly if he had children at home he would be less eager to rent a room in someone else's condo.
         Just another example of how this recession/housing bubble burst is turning people's lives upside down.

    To keep our faces turned toward change, and behave as free spirits in the presence of fate, that is strength undefeatable--Helen Keller

    by kareylou on Thu Nov 10, 2011 at 06:28:50 AM PST

    •  At least he can get $300 more in rent than the (0+ / 0-)

      mortgage. A lot of people can't even do that.

      •  right. (1+ / 0-)
        Recommended by:

        That is an artifact of living close to a metro and bus stop that go directly to DC. We both know how fortunate we are relative to people in, say, Dayton Ohio. Try renting a house for more than the mortgage there!!

        To keep our faces turned toward change, and behave as free spirits in the presence of fate, that is strength undefeatable--Helen Keller

        by kareylou on Thu Nov 10, 2011 at 07:03:34 AM PST

        [ Parent ]

  •  asdf (1+ / 0-)
    Recommended by:
    Unit Zero

    Yesterday, HARP denied us a refi because we're not under 125% loan to value ratio. They told me there's a new rule going into effect in December to uncap that.

    We're more like 200% or 300% loan-to-value, in our run-down little inner ring suburb. I was cynical when I saw McMansion owners walking away because their homes were worth a little less than when they'd bought. But now, running the numbers, I am starting to see the light.

    Weathering Michigan's recessions since the '70s.

    by jennifree2bme on Thu Nov 10, 2011 at 07:49:28 AM PST

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