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Timothy Geithner Forecloses on the Moratorium Debate
By refusing to halt foreclosures to sort out the mortgage mess, the treasury secretary again shows his favour to Wall Street
Treasury Secretary Timothy Geithner is good at telling fairy tales. Geithner first became known to the general public in September of 2008. Back then, he was head of the New York Federal Reserve Board. He was part of the triumvirate, along with Federal Reserve Board chairman Ben Bernanke and then Treasury secretary Henry Paulson, who told congress that it had to pass the Tarp or the economy would collapse.
This was an effective fairytale, since congress quickly handed over $700bn to lend to the banks with few questions asked. Of course, the economy was not about to collapse, just the major Wall Street banks. To prevent the collapse of the banks, congress could have given the money – but with the sort of conditions that would ensure the financial sector would never be the same. Alternatively, it could have allowed the collapse, and then rushed in with the liquidity to bring the financial system back to life.
But the Geithner fairytale did the trick. Terrified members of congress tripped over each other to make sure that they got the money to the banks as quickly as possible.
Now, Geithner has a new fairytale. This time, it is that if the government imposes a foreclosure moratorium, it will lead to chaos in the housing market and jeopardise the health of the recovery.
For the gullible, which includes most of the Washington policy elite, this assertion is probably sufficient to quash any interest in a foreclosure moratorium. But those capable of thinking for themselves may ask how Geithner could have reached this conclusion.
The point of a foreclosure moratorium would be to ensure that proper procedures are being followed. We know that this is not the case at present. There have been several outstanding stories in the media about law firms that specialise in filing documents for short-order foreclosures. They hire anyone they can find to sign legal documents assuring that the papers have been properly reviewed and are in order.
In some cases, this has led to the wrong house being foreclosed. People who are current on their mortgage – or who, in one case, did not even have a mortgage – have been foreclosed by this process. The more common problem would be the assignment of improper fees and penalties to mortgage holders. Or, in many cases, foreclosures have probably occurred where the servicer did not actually possess the necessary legal documents.
A moratorium would give regulators the time needed to review servicers' processes and ensure that they have a system in place that follows the law and will not be subject to abuse. This is the same logic as the Obama administration used when it imposed a moratorium on deepsea drilling following the BP oil spill.
No one can seriously dispute that there is a real problem. Three of the largest servicers, Bank of America, JP Morgan and Ally Financial have already imposed their own moratorium to get their procedures in order. This is just a question of whether we should have regulators oversee the process or "trust the banks".
If the argument for a moratorium is straightforward, it is difficult to see any basis for Geithner's disaster fairytale. If there were a moratorium in place for two to four months, then banks would stop adding to their inventory of foreclosed properties.
But most banks already have a huge inventory of unsold properties. Presumably, they would just sell homes out of this inventory. This "shadow inventory" of foreclosed homes that were being held off the market has been widely talked about by real estate analysts for at least two years. It is difficult to see the harm if it stops growing for a period of time.
Of course, it actually was Obama administration policy to try to slow the process of foreclosure. This has repeatedly been given as a main purpose of its Hamp programme, the idea being that this would give the housing market more time to settle down. Now, we have Geithner issuing warnings of Armageddon if a foreclosure moratorium slows down the foreclosure process.
It doesn't make sense to both push a policy intended to slow the foreclosure process and then oppose a policy precisely because it would slow the process. While this is clearly inconsistent, there has been a consistent pattern to Geithner's positions throughout this crisis.
Support for the Tarp, support for Hamp and opposition to a foreclosure moratorium are all positions that benefit the Wall Street banks. I'm just saying.
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Show All"Rep. Marcy Kaptur, Rep. Alan Grayson and two other valiant Representatives are calling for a federal investigation of federal agencies who are involved in this fraud..." -(allirish)
–And this is what 'pissing into the wind' looks like in America.
We are in the aftermath of all that. Ex post facto.
Believing in the efficacy, moral authority or competence of American political institutions is to feel the piss spray in one's face, then imagining it tastes like Champagne.
There are no politics in America.
May as well throw the book at the judges while you're at it. After all, they were the ones that made the scam legal and official.
Right on allirish!
Why aren't Geithner, Sommers, Bernacke, Paulson, etc. at Gitmo being tortured? "O'Balless" does not have a spine. He hired Wall Street boys to regulate Wall Street and improve the economy instead of hiring Krugman, Johnson etc. Wall Street owns Washington and their money is destroying our democracy. The bankers should be in Leavenworth. Kaptur, Grayson and others should be supported and rewarded by being elected and commended. We have few people in congress that take care of us. Most of our representatives work for Wall Street, the corporations, and the rich. We need real campaign finance reform as well as taxes on Wall Street so the gov't can employ the best people to really regulate those crooked bastards like "Goldfiend" of Goldman Sachs and "Demon Dimond".
The SEC, federal reserve board, bond rating companies, Moody etc. should be convicted of terrorism and treason for destroying the world's economy and sent to Gitmo.
We also need to bring back the old Steagall Glass Law and have some really strong regulatory laws that are enforced.
The middle class needs to be bailed out and there should be a moratorium on mortgages and a trillon dollar job package financed by Wall Street profits to rebuild the infrastructure.
No matter what happens to the Democrats next month or Obama in 2012 - defeat or reelection - all progressives will know and be certain that from now on, the quislings, the money rapers, the corporate stooges, the smiling vampires, the asswipes will rule the Democratic party. Whoever follows this liar and betrayer Obama will be no different, just as Obama is no different than Clinton. You'll get the same promises hurled in your faces with the left hand while the right hand plasters you with yet another load of steaming, choking, viscous shit.
There are probably two things they are concerned about:
One is the massive fraud that might be discovered if they are investigated and the second is the title insurance companies who guarantee clear title to all these properties.
Think of it as another AIG bailout; this time it will be the title insurance companies that get bailed! That would be in the tens of $$TRILLIONS.
Get ready for the legislation that makes this fraud perfectly legal.
You assume they're concerned when, in reality, their wheels are going just trying to figure out how to profit from this.
A period of moratorium would allow the re-tooling of plants in Flint, Michigan to manufacture guillotines.
The head of Timothy Geithner should be exempted from inclusion in the Wash DC public walkway composed of partially buried bankster and Wall Street heads. This is because - after sufficient decomposition - joy unspeakable will befall middle class homeless persons pissing through the eye sockets.
The CFPB is a mini-firetruck arriving at a scene of smoldering ashes. Too little, too late. IMO a waste of your twilight years, Elizabeth.
--Trylon
To understand why Geithner is behaving as he is, it is fundamentally important to understand that Wall $treet is calling itself the "federal government" as evidenced in the following article:
http://www.alternet.org/economy/148537
From that article, it should be clear as to why foreclosure moratoriums just won't happen but I will sum it up neatly. The puppets in Washington wouldn't want to let go of those Wall $treet doggy treats they are getting in return for allowing Wall $treet more power to "tax" Main Street. Unfortunately, the "too big to fail" ideology in the USA never dies down so once again this nation is doomed for another major meltdown having not learned the lessons of the meltdown in the late 1980s and the late 2000s. ::(
Fairytale is the operative word here.
Onward...into the fog.
What we are witnessing here is the breakdown of civil society. We now have a government which aids and abets corporate criminals who engage in criminal behavior. It is well documented that these banks are submitting false affidavits, falsifying notary stamps and forging signatures.
Couple this with the president ordering assassinations of fellow citizens without due process, the reckless drone bombing of people the world over and you begin to realize the true depravity that now grips our nation. Thou shall not kill? They have made a mockery of the concept.
We are on a slippery slope and as the rule of law evaporates within our government, you can rest assured it will evaporate in common society. These are bad times and they are getting worse.
On the other hand , I see people buying 600,000$ condos surrounded by low income housing . I would be pissed if they benefited from a moratorium on foreclosures as well . As a renter I've been ignored from all this talk of loan modifications, ect . With any luck as soon as enough of these over priced condos land in foreclosure the real estate developers will see there profits dip and decide to leave my low income housing alone.( there should be a moratorium on low end foreclosures , like mortgage size of less then 350,000$)
Aaaah...good ole Tax Cheat Tim. Ain't it good to know that there are certain people that can always be counted on to do what's right for their friends?