General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsUpcoming book to reveal that Geithner gamed HAMP to bail out banks, not families
Failure to help actual people is a feature, not a bug.
Warren asked Geithner repeatedly about HAMP. After several evasions, Geithner said about the banks, We estimate that they can handle ten million foreclosures, over time this program will help foam the runway for them.
This is a revelatory moment for Barofsky in the book, and should be for everyone reading. Geithners concern, first of all, was with how the banks would respond to the program, not how homeowners would respond to it. In fact, homeowners are quite besides the point. Regardless of their situation, they will be one of the 10 million foreclosures, in Geithners construction. His goal was merely to space out the foreclosures and give the banks time to earn their way back to health, mostly through the other parts of the bailout, that enabled them to earn profits.
This is a classic extend and pretend scheme; banks can extend the time frame for their losses, and pretend they were financially strong in the meantime. We previously had evidence that Geithner and the Treasury Department thought this way. In August 2010, a Treasury official (which Barofsky outs in the book as Geithner) made basically the same defense of HAMP, that it would give time for the banks to absorb foreclosures rather than have them come on the market all at once. But that came as a defense of the program after the fact. This scene with Warren and Barofsky came in mid-2009, when the program was in its infancy. And its prospective, not retrospective. Its not that Treasury came up with a justification after the performance of HAMP faltered. Its that it was designed this way.
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, were going to see hundreds of thousands of recasts, like on an adjustable-rate mortgage. Maybe the borrowers will have righted their financial ships by then, or saved up enough to move on. But the more logical scenario is for more defaults at that time. But by then, the banks will have built their fortress balance sheets (with lots of government help) and wont mind another half a million foreclosures.
http://news.firedoglake.com/2012/07/20/barofsky-book-geithner-confirmed-in-2009-that-hamp-was-designed-for-banks-to-spread-out-foreclosures/
phantom power
(25,966 posts)MannyGoldstein
(34,589 posts)Shocking.
(But thanks for the OP!)
phantom power
(25,966 posts)Here we have a lousy $50 billion supposedly allocated to actually helping homeowners. So, already we're talking about a small fraction of the absolutely giant free money firehose that the banksters are locked onto like a lamprey eel.
But even that lousy token is too much for the banksters and the stooges they own like Geithner. No, Geithner has to take even that bone and twist it into more fraud, sucking more money from already-underwater families into the pie-holes of the banks.
Really? At long last?
Hell Hath No Fury
(16,327 posts)mckara
(1,708 posts)No doubt in my mind!
JDPriestly
(57,936 posts)And he needs to do it now, not after the election!!!
MindMover
(5,016 posts)it is NOW ....
girl gone mad
(20,634 posts)Egalitarian Thug
(12,448 posts)And yes, it was pointed out many, many times. Geithner, Summers, Emanuel, retaining Bernanke, and so on. Anybody not from the Harvard-G$ cabal was not only not even considered, but was preemptively rejected.
Riping off the world fro trillions of dollars is too big a job for just one man.
bvar22
(39,909 posts)Who got helped?
You will know them by their WORKS,
not by their rhetoric, promises, or excuses.
[font size=5 color=green]Solidarity99![/font][font size=2 color=green]
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