WRONG
TURN
HUFFINGTON
11.04.12
REASON TO BE AFRAID
Obama took office in the midst
of an economic freefall not seen
since the Great Depression.
In January 2009 the economy
hemorrhaged 741,000 jobs, the
biggest decline in 59 years. Banks
that had gotten a massive taxpayer bailout in the wake of the
collapse of Lehman Brothers were
still teetering on the edge of collapse. Home prices had lost 29
percent of their value over the
previous year. Obama’s housing
recovery plan was meant to work
with the stimulus — which he
had signed the day before — to
staunch the bleeding.
Yet the Treasury Department,
which shaped the housing relief
plan, was worried about going too
far. According to the published accounts of former administration
insiders, Treasury Secretary Timothy Geithner was convinced that
bailing out irresponsible homeowners would encourage future
bad behavior.
That fear shaped Obama’s
rhetoric and ultimately the programs themselves.
“The plan I’m announcing focuses on rescuing families who
have played by the rules and acted
“YOU CAN’T AFFORD
TO LEAVE AND YOU
CAN’T AFFORD
TO STAY.”
responsibly,” Obama said sternly,
at the Mesa speech. It would not,
he said, “rescue the unscrupulous
or irresponsible by throwing good
taxpayer money after bad loans.”
Nor would it help speculators who
took risky bets on a housing market, dishonest lenders or people
who bought homes they knew
from the beginning they would
not be able to afford, he said.
It was an impossible goal.
Weeding out those who had
bought a far more expensive house
than they could afford from those
who fell on hard times because
of a job loss or some other misfortune was an impossible goal to
achieve. Modification decisions,
when made correctly, were based
on hard economic data, such as
whether an applicant had a job
and could afford modified payments — not moral grounds.
If he was hoping to forestall
right wing criticism of the plan, it