Binyamin Applebaum of the New York Times has a long piece looking at how the failure of the Obama administration to adequately confront and stop the foreclosure crisis could be a drag on him politically.
Reaction to the piece from people who have been following the foreclosure crisis since its inception has been fairly negative. Yves Smith sees it as a defense of Obama’s failures to take action to help homeowners. David Dayen sees some value in it, while noting that it misses some things pretty dramatically. I tend to agree with David – while this isn’t a strong piece and it offers far more cover than Obama deserves, putting the idea that the administration left hundreds of billions of dollars on the table that could have helped home owners is really important. It’s not something that has shown up in the mainstream media much at all.
Smith and Dayen both note – and again I agree – that it’s odd for Applebaum to totally ignore recent reports from Neil Barofsky’s book that Tim Geithner made clear that the whole plan for the administration was to “foam the runway” to make it possible for banks to survive the massive wave of foreclosures we are now experiencing. The goal was not to help homeowners, but to make sure the banks could make it through the mess without another round of massive bailouts.
All of these [excuses for Obama] fall short, and by the end of the article – and this has been confirmed to me – the President is telling his economic team that they screwed up housing. But the excuses really are an insult, and they are ripped from the context, the real context, that the Administration trod slowly on housing to avoid putting the banks in any jeopardy. The fact that they had all this leverage from the fraudulent use of false and forged documents in state courts, and managed to sew it up in a slap-on-the-wrist settlement, tells you all you need to know. The White House didn’t want to go there because they were afraid they would find something that would force them to act against the banks. So they didn’t, and here we are.
Millions of people are losing their homes because the Obama administration – notably Tim Geithner and the President – did not think it was important to help them stay in their homes. I don’t think stopping this crisis is suddenly going to be a major issue in the presidential election, but it would be nice to know how both candidates plan on stopping the five to seven million foreclosures we’re likely to get in the next few years from happening.