Treasury Makes Shocking Admission: Program for Struggling Homeowners Just a Ploy to Enrich Big Banks

[BridgeTheGap]

The Treasury Dept.'s mortgage relief program isn't just failing, it's actively funneling money from homeowners to bankers, and Treasury likes it that way.
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The Treasury Department's plan to help struggling homeowners has been failing miserably for months. The program is poorly designed, has been poorly implemented and only a tiny percentage of borrowers eligible for help have actually received any meaningful assistance. The initiative lowers monthly payments for borrowers, but fails to reduce their overall debt burden, often increasing that burden, funneling money to banks that borrowers could have saved by simply renting a different home. But according to recent startling admissions from top Treasury officials, the mortgage plan was actually not really about helping borrowers at all. Instead, it was simply one element of a broader effort to pump money into big banks and shield them from losses on bad loans. That's right: Treasury openly admitted that its only serious program purporting to help ordinary citizens was actually a cynical move to help Wall Street megabanks.

Treasury Secretary Timothy Geithner has long made it clear his financial repair plan was based on allowing large banks to "earn" their way back to health. By creating conditions where banks could make easy profits, Getithner and top officials at the Federal Reserve hoped to limit the amount of money taxpayers would have to directly inject into the banks. This was never the best strategy for fixing the financial sector, but it wasn't outright predation, either. But now the Treasury Department is making explicit that it was—and remains—willing to let those so-called "earnings" come directly at the expense of people hit hardest by the recession: struggling borrowers trying to stay in their homes.

This account comes secondhand from a cadre of bloggers who were invited to speak on "deep background" with a handful of Treasury officials—meaning that bloggers would get to speak frankly with top-level folks, but not quote them directly, or attribute views to specific people. But the accounts are all generally distressing, particularly this one from economics whiz Steve Waldman:

The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks.

http://www.alternet.org/economy/147955/treasury_makes_shocking_admission:_program_for_struggling_homeowners_just_a_ploy_to_enrich_big_banks/

[w4rma]

1. **Everything** Geithner does is to enrich the banks. He does nothing that doesn't lead to this

conclusion.

[Cassandra]

2. Because they know...

that the banks still have trillions of dollars of toxic assets and are hoping, when the banks (though not the rest of us) get healthier, they will be able to write them down. Bank balance sheets are far worse than they want to admit to openly and if the banks had to get real, they'd go under.

[pokercat999]

3. Pretend, Extend and Pray

Pretend the banks are solvent, they're not most are actually bankrupt by any "normal" standard.

Extend their failure, kick the can down the road.

Pray that by extension they will return to solvency and all will be good.


Pray in one hand shit in the other and see which one fills up first. I got news for ya, god is either having too much fun playing with ya or it isn't home......your choice.

[clixtox]

4. Our Financial System requires a PONZI SCHEME variation now.

While the big banks are certainly bankrupt by any definition, their predicament is completely overshadowed by the deepening abyss of the US Government's financial fantasy land.

The Federal Reserve is lending money to these stressed banks, interest free, so they can then purchase the Treasury Bonds required to maintain the charade of solvency, that of the banks and the US Government.

The US Government, due to the banking crisis and the "wars", probably can not afford to help the "little" people save their homes, put any significant numbers of unemployed on the Federal payroll or assist the states, cities and school districts facing deficits and down-sizing.

If they could afford to utilize those traditional policies to lesson the pain of the citizenry I think they would, gladly.

An unbelievable culture of mismanagement, waste and corruption has us swirling, preparatory to going, inexorably, down the drain.

Maybe next year...

[truedelphi]

5. Combining this article from "Alternet" with the July and Aug articles

That Matt Taibbi wrote for Rolling Stone, I have a serious case of indigestion.

What party is in charge? Who appointed Geithner?

And where TF is the Mainstreeam Media on this?

The Press Democrat has an article out this week regarding the nerve of this couple who is being foreclosed upon, and how they have signs on the street ridiculing Chase and one other Big Bank for their actions and non actions that brought about the foreclosure.

Article tries to pin it all on the homeowner.

Yeah the homeowners have some responsibility - but they sure would not be facing foreclosure if the money from the Obama Administration actually reached the homeowners that the programs were supposedl to help.

[TexanRudeBoy]

6. Shocking?

Hardly. Its only shocking to the sycophants who still don't get that Obama is an establishment shill just like all before him.

Changing the mascot that's paraded around the White House doesn't actually change anything in this country. Its not left vs. right. Its us vs the aristocracy.