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So how grateful to Tim Geithner is the financial services industry whose interests he prioritized over any help to individual homeowners (as recently confirmed in anecdotes from Elizabeth Warren's upcoming book)?

At WSJ (behind paywall and/or limited free view) (3 days ago but apparently not mentioned on Dkos):

...Mr. Geithner, heading out on a book tour, ...may also be sitting for a deposition.
Ever since [Department of] Justice sued the credit-ratings agency last year for the firm's awful ratings on mortgage bonds, the question has been why the government didn't also charge other ratings agencies that issued equally awful opinions prior to the financial crisis. S&P argues that it was singled out because ... it chose to downgrade the U.S. credit rating in 2011.

...the downgrade... occurred on a summer Friday. "The next Monday morning, August 8, 2011, Secretary [of the Treasury Timothy] Geithner met with President Obama . . . Immediately after that meeting, Secretary Geithner ... "personally expressed his anger at S&P, asserting that it made a two-trillion dollar error" and that Mr. McGraw was "accountable for that."

Who knew (that Geithner's vocabulary included this word)?

I expect that this spat will be settled long before this threat to depose Geithner helps anybody besides S&P, but it is a useful reminder that

the plutocracy is not as internally unified as it often appears.
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Comment Preferences

  •  What about folks that rent? (5+ / 0-)

    It galls me that homeowners expect help from the government to protect their investment in their house.

    The government should be for the People, not for the homeowners.

    •  Economics is not a morality play. (4+ / 0-)

      Had the government made a good faith effort to help both the borrowers and the lenders, we'd ALL be in better shape today.

      If they were to only help those who somehow deserve help, they would have let the banks go under and we would be back in 1931 all over again.

      It is not about who "deserves" help, it is about what is best for us all.

      "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

      by jestbill on Fri Apr 18, 2014 at 10:09:59 PM PDT

      [ Parent ]

      •  You are making an assumption that government (3+ / 0-)

        Propaganda wants us to believe, but is probably not true.

        We should have let the banks go bust that were not solvent.  We wasted resources keeping them from bankruptcy.  Somehow the economic theory that squandering resources somehow benefits an economy has been sold to us all by the propagandists in power.

        •  No bank is ever solvent enough to survive a panic, (3+ / 0-)
          Recommended by:
          salmo, tardis10, gramofsam1

          (and the retail banking which constitutes the everyday plumbing of a non-barter economy had been merged with the highly leveraged gambling that banks have more fun and profit with) so...

          ... something had to be done.

          Certainly there were much better options than simply bailing out the banks without any major effort to reform them.

          •  With FDIC insurance there is no danger (1+ / 0-)
            Recommended by:
            nuclear winter solstice

            Of a panic.  The government can just print the money out of thin air for depositor money, so your argument is bogus.

            And also the government takes over insolvent banks all the time, sells off the assets, and the system does not grind to a halt.

            •  The 2008 panic was not among retail depositors, (3+ / 0-)
              Recommended by:
              salmo, tardis10, gramofsam1

              but rather related to the other portions of the banks into which retail functions and deposits had been merged.

              Those portions had gotten bigger than the retail portions, while linked shadow banking liabilities of banks (and of non-banks that had liabilities to banks) were even bigger, driven by ever-higher leverage.

              So you are correct that:
              (if the retail functions were separated from the others, as was required by the Glass-Steagall Act until it was repealed, and as has been proposed to reinstate, against fierce resistance from the bailed-out back-in-charge banks),
              ...then FIDIC insurance would prevent bankruptcy of retail banks, and damaging interruption of their retail functions.

              If what you mean
              by "let the banks go bankrupt"
              is "take the retail functions out of banks, and let the remaining portions go bankrupt",
              then you and I do not disagree on this, although I believe that the interaction of bank mergers and bankruptcy laws did not enable this to be done without government expenditure as of 2008-2009.

              Even within retail functions, banks' plumbing service is limited to holding FIDIC-insured deposits, but also includes non-FIDIC items such as loans to businesses (big and small), factoring of accounts receivable, credit support, trade-financing. Interrupting all of this, even for a day or two, would have done huge economic damage. Thus my agreement with the Paulson-Geithner-Bernanke-Obama premise that

              something had to be done
              ...despite my dissatisfaction with what they chose to do and how they chose to do it.
          •  I agree largely with Duckmg (2+ / 0-)
            Recommended by:
            Duckmg, dfarrah

            It wasn't the banks or their assets that the government protected, it was their profit structure.

            I'm living in America, and in America you're on your own. America's not a country. It's just a business.

            by CFAmick on Sat Apr 19, 2014 at 07:15:01 AM PDT

            [ Parent ]

        •  We did let Lehmon Bros go bust, and it cause a (2+ / 0-)
          Recommended by:
          gramofsam1, shrike

          catastrophe.  The government didn't want to repeat that with dozens of other banks, including banks much bigger than Lehman Bros.  Had we done what you advise, and let all insolvent banks go bust, we would have ended up in a situation much worse than the Great Depression.  Speaking of which, FDR's first act was to prop up struggling banks.

      •  We don't particularly need private banks, though. (6+ / 0-)

        Sure, there are plenty of yacht-makers, and exquisite wine salesmen who need the current Bankers, but society doesn't need them. And "doesn't need" in same sense of not needing a tree to fall on your head.

        Do the books and what we've got is transfer of wealth and power to fewer and fewer hands. And societies organized like that tend to crumble sooner than later.

        A government is a body of people usually notably ungoverned. -- Firefly

        by Jim P on Fri Apr 18, 2014 at 10:37:31 PM PDT

        [ Parent ]

        •  Jim, I agree. Additional thoughts on this: (9+ / 0-)

          Better responses to the crisis could have included the following:

          1. treating the bail-out payments as a purchase of retail banking functions by public owners (ownership by state and/or local governments would probably be better than by federal government, even if the federal government created the money for the purchase, instead of for the bail-out);

          2. paying bail-out money directly to homeowners, renters and homeless, all of whom would have quickly spent it into the economy (and even more quickly deposited it in the retail banking system, and stopped deafulting on their mortgage loans). This might have eventually enabled participants in the real economy to buy out the financial sector at distressed prices, which would have been economically rational, rather than the opposite scenario we have seen, which is

          the bailed-out financial sector, and its high net worth clients, irrationally being enabled to buy out more of the housing stock and other parts of the real economy at distressed prices.
          •  Obamas moves in this mess was like watching (2+ / 0-)
            Recommended by:
            yoduuuh do or do not, dfarrah

            Coolidge again.

          •  Yup. If the bail-outs had gone just as a pure gift (7+ / 0-)

            (equal share for each living citizen) what people would have done is pay off debts, save, and buy things.

            The first two directly make the Banks' books better (and it's the bankruptcy of the banks that constituted the crisis) and the last makes everyone's economy, and the Banks', Localities', States', and Nation's books better.

            There's the corporate 'key people' delusion. A kind of Caste-Based Exceptionalism; a Top/Down model of reality.

            A claim that if you empower/relieve the best of the lot, then benefits trickle down on everyone. And being a Golden-Calf Worshipping Kind of Society, that means The Monied = The Better.

            A claim manifestly against all experience.

            A government is a body of people usually notably ungoverned. -- Firefly

            by Jim P on Sat Apr 19, 2014 at 12:11:11 AM PDT

            [ Parent ]

        •  The money is not wealth. It is worth nothing, a (3+ / 0-)
          Recommended by:
          bunsk, katiec, side pocket

          figment of the imagination, a tangible symbol. However, money makes it possible to transfer wealth by stealth. That is, behind the shield of money we have legal thievery, which could not be accomplished out in the open. How is this accomplished? Largely via consent. In agreeing to pay interest, for example, borrowers agree to hand over some real asset or labor for nothing. The banker, in having accumulated lots of money, has assumed the position of the historical highwayman, who collected a toll from all travelers by using the threat of force to keep them from going about their business until they paid up. How did the banker get that privilege (to collect money for nothing)? Congress gave it to him.

          It is because the relationship between banker and borrower is based on consent that law enforcement finds it difficult, if not impossible, to intervene. Not to mention that all governmental action is supposed to be in response to either a complaint or a demand.

          Why are we discovering millions of people who are entitled to Medicaid but never got it? Because they hadn't asked until they were prompted to do so by the ACA.

          "Don't ask, don't tell" was truly a pernicious strategy -- more pernicious than anyone knew. Because, in a sense, it constituted a new use for the position implied by the conditional sentence, "If they don't ask, don't tell them what the law is or their rights are." By making the phrase overt in relation to issues of sex and gender, it's traditional role in dispensing favors to the privileged/demanding class was obscured.
          But, I think we have another unintended consequence here. The affected homosexual persons perceived it as a bridge too far and were prompted to demand their civil rights, only to discover that there's another corollary to "don't ask, don't tell" -- i.e. "if you don't ask, you don't get" and then the obverse is also true "ask to get."

          I've realized for quite a long time that the injunction "ask and you shall receive" should really be read not as a guarantee of getting, but as a statement that, if one doesn't ask, not getting is certain. The key is in the asking. Which, of course, makes sense from the perspective of lazy bureaucrats who don't want to be bothered delivering a service. If nobody asks, then they're home free.
          So, constant vigilance is not enough. If we want our agents of government to work, we've got to demand service.

          I had a good friend (he died some years ago) who was a firm believer in enthropy, that everything is bound to deteriorate and so there is no point in trying to do anything to stop it (that's how he explained it), but I thought he was wrong and now I know why. It's not a matter of stopping deterioration or anything else. What we need to do is initiate action by making demands.
          If we want something, we have to ask for it. Those who don't ask, don't get.

          On the other hand, for some many years now our agents of government have been on a pro-active kick. That is, they have been preaching to each other that they should take the initiative. It's an appealing notion to the citizenry -- that government would operate automatically. But, that's not how it's supposed to be. The initiative lies with the citizenry. If they're not called, the emergency services aren't supposed to respond. Which tells us that the "silent majority" was really just a desideratum designed to let our public servants loaf on the job.

          I think we have to revise our attitude towards petitions. It's not laws we have to petition for, it's services. So, the obligations of citizenship would read:

          to vote
          to hold office
          to serve on juries
          to petition for services
          to provide support
          to enforce the laws

          by hannah on Sat Apr 19, 2014 at 02:38:51 AM PDT

          [ Parent ]

    •  How R renters doing fm TG's screw of homeowners (5+ / 0-)

      and rescue of banks?

      Duckmg, I have stated before that you refuse to acknowledge facts or arguments which contradict the sloganeering you use in place of analysis -- on the different subject of inflation and Krugman.  

      When you find yourself echoing Rick Santelli's "spontaneous" rant to launch the Tea Party movement, you need to take a deep breath and ask yourself a few questions.  How about starting with this question:

      are you now happy with this progress?
      •    unlike before the financial crisis caused so many individual homeowners to lose their homes (and down payments, improvements, credit ratings, etc.),
      •    we are much closer than we were to a world that actually is divided between the homeowners and the People.
      To be clear, you are correct that privileging homeowners over renters was always questionable and probably bad public policy, but

      the peanuts received by most former homeowners are trivial compared to the government preferences received by mortgage lenders and other asset-holders and financial "services" providers, that have benefited from Santelli's and your rhetoric against homeowners.

      Many homeowners were pressured and/or fraudulently induced by banks into the riskiest possible home-borrowing approaches that the banks were already betting against in the highly leveraged derivatives markets that triggered the crisis.

      That's a key reason for Elizabeth Warren's marathon struggle on behalf of consumers of financial services.  Are you going to start sloganeering against Warren on this the way you already do against Krugman on inflation?

      •  this is such an important point. (1+ / 0-)
        Recommended by:
        Calamity Jean
        Many homeowners were pressured and/or fraudulently induced by banks into the riskiest possible home-borrowing approaches that the banks were already betting against in the highly leveraged derivatives markets that triggered the crisis.

        We are all pupils in the eyes of God.

        by nuclear winter solstice on Sat Apr 19, 2014 at 04:34:20 AM PDT

        [ Parent ]

        •  It's worse than you think (0+ / 0-)

          loan originators KNEW that the creditworthiness of their prospective homeowners was less than stirling, yet approved the loans to get their fees. No one has gone after those fees, to punish the fraud at the root of the problem. Nor has the government adequately punished the banks whose management approved the loans. Nor has the SEC punished sufficiently the managements who defrauded the stockholders. Instead, the government has in essence become a co-conspirator in the fraud, by rewarding the banksters to continue outside of jail. In return, the banks are propping up real estte prices that would otherwise fall to real market rates, by the hundreds of millions of dollars at a clip, setting an unrealistically high floor on real estate prices, so they can seek higher loans from a new wave of potential homeowners, just at a time when interest rates are widely expected to rise. This might make the average new home about 50 percent higher in cost, and if the average homeowner pays 3-3.5 times the value of the original mortgage in principal and interest, then you are talking maybe another $175,000 of wealth disappearing from the average first time homebuyer for each $100,000 of real market value of the house. Death by a thousand cuts, bankster style.

      •  The government spends trillions of dollars to (0+ / 0-)

        Raise the price of housing.

        We have the mortgage interest deduction.  We have the FHA,  we have Fannie and Freddie.  We have HARP and HAMP.  We have the Fed printing up trillions of dollars out of thin air to buy MBS. And on and on.

        For the most part this just forces homeowners to take on an obscene amount of debt to buy a house.  So I agree that many homeowners are not really helped by all of this.

        Wealthy homeowners are certainly helped, and folks that may want to buy a house are getting cheated by government big time.  So this policy increases the wealth gap.

        Also historically this stupid policy seriously contributed to urban sprawl and it steals resources from poorer neighborhoods where fewer folks own and housing is less expensive and gives to wealthy neighborhoods.

    •  'The Rent is Too Damn High' was not just a clever (1+ / 0-)
      Recommended by:
      Calamity Jean

      name for a NYC political party. It's a Top Story.

      A government is a body of people usually notably ungoverned. -- Firefly

      by Jim P on Fri Apr 18, 2014 at 10:32:56 PM PDT

      [ Parent ]

    •  Agreed (0+ / 0-)

      I had the chance to get into a risky mortage in order to own a home. But I saw the trap and declined and continued to rent.

      For making that good decision I get to watch as those that did not do the math get free cash.

      •  Horace, did U see the cash go to homeowners, or (5+ / 0-)

        just hear that it was going to happen? Warren's book's anecdote shows that "cash to homeowners" was just a cover story for "cash to banks", without even using homeowners as middlemen.

        Like Duckmg, you are correct that privileging homeowners over renters was always questionable and probably bad public policy, but accepting that as an important line for 'taking sides' on related policy issues is to be suckered by the homelenders and other real owners of the eoncomy.

        More details in this comment:

        •  Here are a few stats, and links to many more... (9+ / 0-)

          I’ve published at least 50 posts on Geithner, with many of those posts covering the inconvenient reality that the guy did more to undermine the middle class when it needed our government's help most than almost anyone else in this generation (this is from October 31st, 2013)…

          …As I noted in a post here on September 18th, after our economy crashed in 2008, our government set aside $50 billion to aid distressed homeowners via the originally-established homeowner/mortgage bailout programs that were implemented that year and in 2009.

          That amount was then quietly scaled back in Congress to $29.93 billion.

          As of today, since 2008, our government has spent a paltry $6.05 billion to aid homeowners with mortgage modifications. Here's a link to more from ProPublica supporting these shameful statistics

          Meanwhile, here we are, more than six years after the start of the Great Recession, and over the past couple of weeks, we've learned that Citi failed the Fed's most recent stress test, and they're nothing short of being a complete mess, even now. And, Bank of America just announced a loss for the past quarter.

          Here's more in a post here this past Sunday...

          Since 2008, I’ve noted (and annotated it) in many posts over the years at Daily Kos that, conservatively speaking, Wall Street has been sucking at least $200 billion per year in taxpayers’ funds out of the pockets of Main Street. In his op-ed in Monday’s NY Times, Paul Krugman references a paper by NYU Stern School of Business Associate Professor Thomas Philippon that “puts it at several hundred billion dollars per year”...

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Sat Apr 19, 2014 at 12:12:02 AM PDT

          [ Parent ]

          •  Horace & Duckmg, please note bobswern's (7+ / 0-)


            paltry $6.05 billion to aid homeowners with mortgage modifications.
            The major villain in this picture is not homeowners (even those who were greedier or stupider than you),

            it is the banks that caused the crisis, received the vast majority of bailout funds (and of benefits from suppressed interest rates --- and excessively low inflation), and that now are more likely to be your landlord, and to raise your rent, than before the crisis.

            We knew that's how it played out, and now Warren has given us color on Geithner's early articulation that this is exactly how it was intended to play out, with the slogan of "bailing out homeowners" serving merely as a combination fig leaf and cover story.

            •  On top of this, Geithner was both admonished... (7+ / 0-)

     Congress, roughly a year into the Obama administration, for doing a piss-poor job helping homeowners; and, in response to that very public admonishment, he publicly responded with a mea culpa in front Congress, in real time. THEN, he proceeded to continue to turn his back on Main Street from the beginning of 2010 onward, adding insult to that injury, no less!

              "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

              by bobswern on Sat Apr 19, 2014 at 01:19:20 AM PDT

              [ Parent ]

          •  Well, How Many of Us Actually (2+ / 0-)
            Recommended by:
            bobswern, dfarrah

            believed Citi passed the initial so called stress test after the crash?

            Citibank should have been nationalized and used as a vehicle to support homeowners and Main Street-- small to medium sized businesses. This would have helped millions of people who did nothing wrong, who did nothing to cause the crash. This would have also stopped property values from going into the toilet which in turn caused millions of people to walk away from their homes because they were under water.

            Instead, Obama listened to Wall St. lackeys Geithner, Rubin, and Summers; the answer was business as usual: put the burden of the crash, caused by the banksters/private industry, on the public-- homeowners and small businesses who saw Billions of investment value go down the drain.

            Here we are six years later, the residential and commercial construction markets limping along, barely doing anything-- millions of construction jobs not coming back.

            BTW, it turns out it's not so easy to walk away from a home it no longer makes financial sense to pay for:


            "We are beyond law, which is not unusual for an empire; unfortunately, we are also beyond common sense." Gore Vidal

            by Superpole on Sat Apr 19, 2014 at 06:06:37 AM PDT

            [ Parent ]

        •  Mortage tax breaks (0+ / 0-)

          Are inherently discriminatory because we know which segments of the population skew towards homeowners.

          •  Plus the home mtg (2+ / 0-)
            Recommended by:
            Horace Boothroyd III, jfdunphy

            deduction helps to inflate the value of the house.

            I am paying for my house, but I don't really think there is a good reason that home mtg interest should be deductible.  Then again, I don't see why children should be deductible either.  But that's another story.

            The banks have a stranglehold on the political process. Mike Whitney

            by dfarrah on Sat Apr 19, 2014 at 01:14:22 PM PDT

            [ Parent ]

    •   The banks foreclosing often can't show the (1+ / 0-)
      Recommended by:

      note, and have already been made whole.

      Should homeowners be the only ones protected?  Of course not, but there's tons that can be done to make things equitable:  Like a universal debt jubilee, which many have given thought to how it would work.  Steve Keen being but one of them.

    •  Rents went up (0+ / 0-)

      because so many people were getting tossed out of their homes.

      The banks have a stranglehold on the political process. Mike Whitney

      by dfarrah on Sat Apr 19, 2014 at 01:03:59 PM PDT

      [ Parent ]

  •  I love Elizabeth Warren and this book looks (2+ / 0-)
    Recommended by:
    Horace Boothroyd III, salmo


    "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

    by HoundDog on Fri Apr 18, 2014 at 10:30:59 PM PDT

    •  Agree that the book (0+ / 0-)

      should be interesting.

      She also defends Geithner in the book is not as black and white as some like to think.

      •  Defending Geithner on other points smartly (1+ / 0-)
        Recommended by:

        avoids seeming to have a vendetta against him, and adds credibility to the devastating disclosure that

        This is deservedly getting noticed again, although it was also publicized in reviews of the 2012 book by Neil Barofsky. It has not yet run its course, as explained here by FDL:

        As Barofsky says, HAMP was not separate from the bailouts, it was part of them. It squeezed a few extra payments out of borrowers and then allowed banks to do with them whatever they wanted. It stretched out the foreclosure crisis, by design. In fact, by the end of this, HAMP may not help even the borrowers secure in permanent modifications. Not only are the modifications of inferior quality, and not only have they led to high re-default rates already, but most of the permanent modifications are not permanent at all. Barofsky notes in the book that they have five-year time limits, with interest rates rising and payments returning to their original size at that time. So in 2014 and 2015, we’re going to see hundreds of thousands of recasts, like on an adjustable-rate mortgage.

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