What do you get when you cross Tim Geithner and Peter Peterson?
Barack Obama; who would rather help the big banks and "balance" the budget than offer a helping hand for struggling homeowners. (Image)
The president demonstrated new heights of indifference toward the people in his handling of the mortgage relief program made a part of the Trouble Asset Relief Program (TARP). Citizens paid the full share for TARP and were to get a modest proportion. That's not the case. The November 2010 Congressional Budget Office Report on TARP was just issued. It showed that the funds for home mortgage assistance programs would be reduced from $50 billion to $12 billion, as reported in the Huffington Post.
Reading the details of the report, we find that the take back from homeowner relief through TARP funds is even more outrageous. The actual funds spent so far for homeowner relief is only $710 million.
The remaining $11 billion "additional funds" billion of will not likely materialize. In his October 2007 report the Special Inspector General for TARP, Neal Barofsky, noted that, "HAMP produced a net increase of fewer than 26,000 permanent modifications a month signaling that the anemic pace of permanent modifications may even get worse" The $11 billion "additional funds" will be treated like the previous $50 billion commitment that turned into $11 billion. It is an accounting version of Zeno's Paradox.
In the mean time, AIG got $48 billion and Investment Partnerships another $15 billion, none of which has been paid back. So the score is AIG/Bankers $94 billion - Homeowners $0.71 billion. Quite a deal!
Here are the CBO Report figures on the actual beneficiaries of the mortgage relief programs under TARP. There were 207,000 permanent loan modifications with 28,000 canceled for a net of 179,000 homes saved for citizens. The much publicized trial loan modification program under HAMP had 1.7 million loans enrolled. Forty one percent of these were canceled and another 173,000, 10%, are in "limbo" providing no benefit to homeowners.
Commenting on the Department of Treasury handling of homeowner assistance, Special Inspector General Neal Barofsky, said,
"Treasury has steadfastly rejected these recommendations and now finds itself defending a program that is failing to meet TARP's goal of 'preserving home ownership.' As a result, a program that began with much promise now must be counted among those that risk penetrating public anger and mistrust." Neal Barofsky, Special Inspector General Tarp Oct 26
Apparently the President missed this
Individual bankruptcies are up significantly. Bankruptcy Data Project The seriousness of the increase is indicated y the graph below which compares 24 month periods before and after the hypothesized October 2008 financial meltdown.
Bankruptcies are approaching 140,000 a month and. Banks foreclosed on two million homes since 2009. But AIG, with several thousand employees has received every cent allocated while just a fraction of the TARP money intended for mortgage programs has materialized.
In addition to total bankruptcy increases, Chapter 13 bankruptcies are barely a third of the total of Chapter 7 and Chapter 13 combined. Chapter 13 offers citizens the chance to retain their homes and other assets. Chapter 7 is simply a surrender of all assets, including the family home.
The worse things get the worse they make them
We've got a dead economy, real unemployment approaching 20%, and no bubbles on the horizon. What's the response?
Give the companies and the people who caused the problem hundreds of billions and the citizens next to nothing. Act like we're in a recovery and the recession is over. And focus on balancing that damn budget by cutting the only truly budget neutral program, the one that pays for itself, Social Security. Start some more wars and create a war on terror side show by irradiating or groping all commercial airline passengers.
Here's the frightening thing. If you think things are bad now, wait until the new crop of Republicans takes over the House. The President of the Tea Party Nation, Judson Phillips, just announced that he favors restricting the vote to property owners only. Of course, there may be problems with that since the people he thinks are property holders are really debt slaves to the big banks, the real property owners.
Another chapter in the great decline brought to you by The Money Party.
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