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Barney Frank: Obama Rejected Bush Administration Concession to Write Down Mortgages

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Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Here’s Barney Frank, in an exit interview recently in New York Magazine, revealing unwittingly that Obama during the transition rejected a Bush administration concession to write down mortgages.  Here’s what Barney said.

The mortgage crisis was worsened this past time because critical decisions were made during the transition between Bush and Obama. We voted the TARP out. The TARP was basically being administered by Hank Paulson as the last man home in a lame duck, and I was disappointed. I tried to get them to use the TARP to put some leverage on the banks to do more about mortgages, and Paulson at first resisted that, he just wanted to get the money out. And after he got the first chunk of money out, he would have had to ask for a second chunk, he said, all right, I’ll tell you what, I’ll ask for that second chunk and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it.  This is now December, so we tried to get the Obama people to ask him and they wouldn’t do it.

This is consistent with other accounts.  There were policy debates within Obama’s economic team about what to do about the mortgage crisis.  The choices were to create some sort of legal entity to write down mortgage debt or to allow the write-down of mortgage debt through a massive wave of foreclosures over the next four to six years.  He choice the latter.  That choice was part of what led to roughly $7 trillion of middle class wealth gone, with financial assets for the elites re-inflated.

Since I pointed out that the growth of income inequality under Obama is worse than that under Bush, many people have responded by saying that somehow this is not Obama’s responsibility, that it was an inherited crisis and structural problems that caused a widening of inequality.  They simply do not want to accept that policy matters, or, if it does, that Obama had any choice in the policy choices he made.

In fact, crisis response is the single most significant policymaking time imaginable, because all structural barriers are swept away.  Think about it – this was literally a deal offered by Hank Paulson – one guy – to Barack Obama, with a multi-trillion dollar impact.  No 60 votes in the Senate.  No hearings.  No confirmations.  Just a handshake, basically.  In other words, policy does matter, and Obama had a variety of choices and leverage, and he did what he thought was best.  He did not want to write down mortgages, even though he was offered that choice by the Bush administration and Barney Frank.  So he didn’t.

So yes, Barack Obama is worse than George Bush on economic inequality.  While Paulson didn’t want to write down mortgages, the single biggest factor in determining whether the American middle class has any stored wealth, Paulson was willing to do so in response to pressure.  Barack Obama was not.

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120 comments

  1. joecostello

    Typical Barney Frank BS. Wasn’t Barney in the Congress, wasn’t he in fact the big fat chairman of the House financial services committee? If you want to help mortgage holders, cant you just write it into the bill? Good riddance to bad rubbish, Obama’s hardly the only problem with the Democrats, its pretty much the whole rotted lot.

    1. Leviathan

      You appear to know practically nothing about how Washington works. Let’s refresh our middle school civics: Treasury is in the Administrative Branch; Frank was the point man for the Legislative Branch. These two guys, with oversight by the presidents (as this was the transition) had all the cards in their hands. Barry balked. He had the power, and he balked.

      Let’s take this a step further: why did he balk? Must have been on the advice of Summers and Geithner. So these two Wall Street whores were even MORE feckless, unpatriotic, and short-sighted than the former head of Goldman, who was working AS a GOLDMAN PLANT. Sorta puts things in a whole new perspective, doesn’t it?

      1. alex

        “the former head of Goldman, who was working AS a GOLDMAN PLANT”

        Come on. Everybody knows that Paulson is a pinko, and Goldman-Sachs is just a front for the Comintern. Obama is a real capitalist who would never stand for such nonsense.

        1. Leviathan

          I’ll say this much about Paulson: he is like the guy who appointed him–not a deep thinker, but a doer. Everything on the gut level. He’s a football player. What’s the play? Get er done.

          Obama surrounded himself with guys like him: slick, over-educated, not much for team sports (tennis, not football). How’s this gonna read? How’s it gonna impact reelection plan?

          Different animals. Both substandard in historical terms. But the Bush people, oddly, more human.

          1. kabosht

            Hey, I have no love for Obama- but to my great distress, he actually had the tennis court at the white house torn up and replaced by a basketball court. There are many things to hate about Obama; his relationship to team sports is not one of them.

          2. Kevin Egan

            My comment was for Leviathan–I’m not qualified to comment on choice of tennis versus basketball!

    2. MacCruiskeen

      Indeed, Frank has a lot to answer for. He frequently took very bank-friendly positions in legislation. He pushed to allow the GSE’s to raise their loan limits at the peak of the bubble. He pushed hard to pass the TARP after the first vote failed in the House. It only passed after an additional $150 billion in bribes for votes were added. The bill expanded from Paulson’s three-page ransom note to a 700-page monster, but with all of that Frank was helpless on mortgage help? There is a great deal of buck-passing in his comments.

    3. Roman Berry

      Dang if I can see where your comment has anything at all to do with Stoller’s post concerning Barney Frank’s revelation (or confirmation really) that Obama rejected the Bush administration’s offer to write down mortgages.

      1. Walter Wit Man

        He’s questioning Frank’s motive. He seems to be saying Frank is not a serious reformer, and is grandstanding. Frank is claiming it was the administration’s fault for not enacting enough reform when he was similarly culpable. It’s intended to sucker Democrats into thinking there is a fight over the direction of the party. That’s bullshit. They all are corporate lackeys that simply ‘pass the buck’ and always have a ready excuse for why they were unable to pass their reform.

        1. MacCruiskeen

          Exactly. Frank’s words cannot be taken at face value. TARP wouldn’t have passed at all without his effort, so he had some leverage to dictate the terms. So clearly, he punted on this issue and wanted someone else left holding the bag, and who better than the guy who wasn’t even in office yet.

    4. Middle Seaman

      This typical pretend liberal knife sticking exercise. Frank was one the Good liberals in congress. He clearly surpasses 99% of the members in intelligence. He didn’t do anything “unwittingly.”

      The rush to condemn those who do not promise and deliver the full and ultimate goal, as Frank obviously didn’t, is childish and counter productive.

    5. psychohistorian

      We need more entertaining trolls, please. Maybe if they paid you more, you could work up some better BS.

      Maybe you should have said 1st in your premier comment and then we would have understood your true intelligence.

    6. LucyLulu

      The bailout for the elites had enough problems passing. No way Congress would’ve passed a bill that would have bailed out the little people. The little people must not benefit from the same privileges as the elite. By George, let them earn their money by putting in all the necessary sweat equity and then some……. like the elite used to way back when.

    7. Just For The Record

      Yves appears to let her hatred for Obama get in the way of math.

      She is comparing part of $700 Billion in Tarp Funds of which I believe $350 Billion was spend on tax cuts for nation; with the $7 Trillion Dollar wealth gap.

      Even accepting her argument even if every dollar was spent on the “wealth gap” it would not have made a significant dent in the overall situation. However, the remaining tarp funds would not have been available to juice the economy.

      Further, most people experienced much more than a 10% drop in housing prices.

      Further, this $7 Trillion Dollar wealth gap was created by an artificial bubble. An overheated market created housing vaules that people now use to suggest that somehow they have lost this wealth.

      However, anybody that did not sell their house and did not buy another inflated home would have never experienced this wealth anyway. It was a bubble. Once the bubble burst-as it did-housing values would have had to retreat back to normal levels.

      So if you allow your hatred to shine through so that you can make Barack Obama be worse than the moral equivalence of George Bush who actually lied us into war killing over 3,000 American Citizens unnecessarily and injuring over 50,000 many of whom we will have to support for the rest of their lives, then you can bring yourself to making these riduculous comments.

      Truly, Ives, I don’t know why I keep coming to your site. You have truly jumped the shark.

  2. MoveOn Ofraud

    Hmm. Most of the recent propaganda says that Ofraud would prefer write downs and that the “problem” is the lone Republican obstructionist, on closer inspection, this is total bullsh#t. But, let’s put 2009 out of mind for a moment, this was when Ofraud first lied about helping anyone but the Banksters. The conclusion to draw from the theatrics is that the status quo are high-fiving each other, awash in lobbyist cash, with the important role of giving the public the idea that indeed our leadership is “hand wringing” over economic decimation. The cabal seems to be annoyed at the deadbeats, at every level of Gov’mint there’s a level of hostility giving precedence to corrupt Fannie law firms, big realtors, Funnie Mae, anyone who will help Banksters steal houses faster. I’d say there is still a war on, and I’d bet Diana Orlick’s propaganda on it.
    Ofraud worse than Boosh? lLet’s count the comments!

  3. Blurtman

    Underlying this story is some misguided belief that Obama was qualified to know the correct path. We always assign to leaders, especially very eloquent leaders, knowledge and competence that just is not there.

    Obama did not know what he was doing when he assumed the office of the presidency, and he may still not know what he is doing. Geithner, Summers, let’s just move forward – Hello!

    1. Fat Butch

      This appeal to ‘he’s just a figurehead with a teleprompter’ is surrender. When most people say Obama, they do in fact, refer to the entire administration. Impeach. Look at the way Hillary brandishes her teeth, holy sh#t.

      1. Dave of Maryland

        So why are we electing unqualified jerks to the highest position in the world?

        Why are they even permitted to run?

        1. Blurtman

          Because we are easily played, obviously. Wave a flag, promise better things, smile, have a beer with me, keep me safe, and you got my vote. Just let me continue to be comfortably numb.

        2. Blarney Stone

          Ford: “You can Have Any Color you want as Long as It’s Black”
          Twain: “If voting made any difference, they wouldn’t let us do it.”"
          George Carlin: “The Game Is Rigged, You Have No Choice”

        3. Ruben

          There is a natural selection process going on. Charlatanism, cronyism, and immorality, along with some organizational abilities, confer selective advantages in the process of escalating the political hierarchy.

    2. Strangely Enough

      But, if all the “wrong” decisions point in a single direction, it gets harder to blame it solely on sheer incompetence.

    3. Walter Wit Man

      Obama is probably the most competent and successful presidents in the modern era. I would say only Reagan is comparable. Both have made conservate neoliberalism the reigning religion of America.

      Obama was never a liberal. Never. He has the same goals as Reagan, Romney, the Bushes and even the Clitons too: to service the rich and to fuck the rest of us over, while lying to us about it as he fucks us over. These are master mindfuckers. You are a fool if you trust them or look up to them. You should view them as the Hitlers they are. I say that in all seriousness–they are no different than Hitler. Probably worse.

      For some reason, tons of Democratic voters get suckered by this and a good other portion are actively in on the scam (like Kos, Digby, Booman, etc., fucking etc.).

        1. Walter Wit Man

          thanks for the link!

          I just recently heard about this history and definitely intend to look into it further. It is very interesting to see the relationship between the U.S. and Germany, before, during, and after the war. It is very complex and hidden. I get the sense they hid their conspiracies much more effectively back then! Ha. Or maybe the internet has actually helped the commoner discover elite conspiracies more quickly nowadays.

          Your link just proves the point I made in the Assange thread from yesterday, that conspiracy theory investigation may be a more useful study of history and politics than what we see passing for history in the two main parties, for instance. Or what we are taught in schools or by the media (which it appears has been totally controlled by gov. intelligence since at least WWII).

          The history we were told about Hitler and WWII is totally misleading propaganda.

        2. Lambert Strether

          Hitler was never better, not even in “the beginning.” See Richard Evans on “The Coming of the Third Reich.” Although Hitler did prove that military Keynesianism works, if that’s your definition of better.

          1. Archie

            Yes, well it all depends on your perspective doesn’t it? Fact is he did dramatically improve the lives of the suffering post war german populace, despite the onerous war reparations scam imposed by the banking elites.

            Hitler’s story isn’t all that much different from Saddam’s story or Ghadaffi’s story. They all defied the ruling world financial order and were taken out while wearing the devil’s horns.

            Barry is just the latest agent to carry their water. He has done far less for his people than Hitler, or Saddam or Ghaddafi.

          2. Lambert Strether

            @Archie Yeah, it does. Reading assigment: “The Ones Who Walk Away from Omelas,” by Ursula LeGuin.

            “[T]aken out while wearing the devil’s horns.” That’s good. Way to normalize, there, dude.

          3. Archie

            Lambert @ 9:10 said:

            @Archie Yeah, it does. Reading assigment: “The Ones Who Walk Away from Omelas,” by Ursula LeGuin.

            I prefer “The Lathe of Heaven”. But I would not be so condescending as to give you a reading assignment. It would be a waste of my time.

          4. Lambert Strether

            @Archie: You must get that a lot. But then, if you treat the Baathists and the Nazis as equivalents, I guess you’ve got so expect it. Sorry if I offended.

      1. weinerdog43

        Walter, I’m with you. Barry is far more effective in keeping the few remaining Lefties bottled up than Romney would be. Only Barry can gut Social Security.

      2. Ruben

        “Obama was never a liberal. Never. He has the same goals as Reagan, Romney, the Bushes and even the Clitons too: to service the rich and to fuck the rest of us over…”

        According to neoliberal theory, the stateman should service the rich _to make everybody better off_. The theory is not just a deliberate rip off of large numbers of subjects. It ascertains that the very very rich have a proven record of wealth creation. Thus in order to create wealth, the wise stateman should do every effort to engineer the transfer wealth from the largest number of normal subjects to the smallest number of wealthiest individuals. That way total wealth increases, the theory says.

        This theory is great from a stateman point of view, because it allows you to explictly govern for those who can fund your climb to the top of the political hierarchy while implicitly governing for all the subjects. With this balsam in his concience the stateman will be able to unleash the full power of his charlatanism.

    4. bdy

      Senator Obama showed some Kugman-like understanding of macro issues in the direct aftermath of the crisis, before becoming president. There was the whole: when the banks can’t extend credit the only way to strengthen demand is to spend so that’s why wee need a stimulus thing.

      It was enough to show that he was at least thinking about it, or listening to folks who thought about it a little – certainly enough to show that he would understand credit write downs are better for the economy than foreclosures.

      He’s a bad man. I got another panhandle from the DNC yesterday. I keep writing back “FUCK YOU” in big block letters but they won’t quit. Sheesh.

    5. damian

      Obama was taking orders from Dimon at that time, especially on mortgage write downs – chase has a $100 billion second mortgage balance and would have been impacted very hard – this is all about payback by obama for election help – he didnt understand the impact – instead of helping the banks if he aided the consumers with big mortgage balances underwater – the recovery would be way ahead today – totally misguided

  4. F. Beard

    The choices were to create some sort of legal entity to write down mortgage debt or to allow the write-down of mortgage debt through a massive wave of foreclosures over the next four to six years. Matt Stoller

    A universal bailout would fix everyone from the bottom up including the banks.

    People have a “normalcy bias” wrt to banks when it should be obvious now after centuries of experience that banks are a disaster waiting to happen.

  5. Jeff Freeway

    How many of the folk have asked our National Security Complex to graciously smash the living sh#t out of TBTF without any response what-so-ever? Really is despairing to note that Wells Fargo, Citi, BOA, Chase et al are arbiters of our very existence. They own the goons at every level too, which isn’t encouraging.

  6. Conscience of a conservative

    Fed policy(zirp & operation twist) have also exacerabated the income inequality gap. Depriving savers(working class and middle class) of interest and rewarding stock holders(higher income groups)…

    1. Force Fed

      Stating the obvious. The government borrows money that ultimately comes from private banks, which admittedly create it out of thin air, and soak the taxpayers for a whopping interest bill.

  7. Jill

    Obama was not a passive actor. Yes, he’s doing what he’s told and he really isn’t that bright. I’ll agree with his supporters about that! Still, he was the one making the phone calls, pressuring people to vote yes on the bailout after it was voted down. And he did reject this write down.

    Handlers told him what to do and what not to do. He followed orders!

    So I’m wondering why saying someone is a stupid but obeisant figurehead is a reason to admire and vote for the guy. Normally, these aren’t things you’d put on your resume for president. But in the world of paid Obama shills and his true believers, this is one of Obama’s bestest qualities!

  8. kharris

    The conclusion “Obama is worse than Bush on economic inequality” is simply sensationalistic. It is so broad that it has little objective meaning, but that’s the only way the author had any chance to offer an eye-catching wrap-up. Sorry, but the impulse to get noticed is not a justification for that sort of silly-assed conclusion.

    Bush imposed at policies with the central goal of fostering inequality. Bush tax cuts aimed at income redistribution. Bush sought war, the secondary result of which was to enrich the rich. Obama made a choice in the middle of a crisis that – to the best of Barney Frank’s ability to evaluate counterfactuals – resulted in more loss of wealth than would otherwise be the case.

    The author needs “economic inequality” because he apparently can’t think of a story about income inequality. I can, so let me help. Obama’s failure to pursue a big enough fiscal stimulus led to greater wage stagnation and job loss than would otherwise have been the case, making him worse than Bush, who did … far less on the fiscal side in the face of the second Bush recession. This is at least as fair as blaming Obama for an imagined outcome of a policy that was not actually aimed at improving the distribution of wealth in the first instance.

    Obama has not been the president that many of his supporters wanted. Neither was Clinton, for that matter. Fine, then criticize him for things that he did wrong, not for Barney Frank complaining that the White House failed to do what Barney wanted.

    1. Francois T

      “Fine, then criticize him for things that he did wrong”

      Isn’t it precisely the point of Stoller’s post? Or is it impolite to point out that banksters never had a better friend in DC?

    2. Teejay

      Wage stagnation was exacerbated because the stimulus wasn’t big enough?! Agreed, the stimulus was too small, but that doesn’t lead to increased wage stagnation!

    3. Walter Wit Man

      Are people better off than they were 4 years ago?

      No!

      There is just as much inequality, if not more!

      Even me, who is a pessimist, was shocked at how little Obama did to remedy the inequality. I thought he would be pressured into bringing the banks to heel a little bit.

      Obama extend the Bush tax cuts. He attacked single payer and socialized medicine in a way the Republicans could never do. Obama did incalculable damage to our nation’s health care policy. We will be locked in a visious death dance with pharma and insurance companies for decades as they bleed us dry.

      Obama also made the prospects for social Security worse. His payroll tax cut will weaken the fund, not to mention the fact Obama is concern trolling the fund and pretending that it is in jeopardy and may need to be cut! Obama and Pelosi are playing the same game with Social Security that Obama and Frank are playing with housing policy. They are pretending to help when in actuality they are enacting the conservative agenda.

      1. mad as hell.

        100%. Wait until the lame duck session. All those ousted self serving legislators are going gut the shit out of social security, medicare and medicaid.Then they are going take their new lobbying jobs and hide behind the country club walls while the rest of America is scratching their ass wondering what happened.

        Obama will be grinning ear to ear richer then he ever imagined. President or defeated president he will NEVER have a financial difficulty.

    4. Lambert Strether

      Speaking of counterfactuals, your statement that “Obama made a choice in the middle of a crisis” in rejecting Paulson’s offer is…. most likely not true. Obama rejected the HOLC solution October 2008, saying it should be “studied”. Regardless of the merits of HOLC, an FDR-style solution proven to work, that proves Obama had his housing policy options in play well before Paulson’s proposal to Frank in December.

      And don’t you think it’s just a little weird to accuse the author of making up stories, when attributing motives that you cannot possibly know is, well, making up a story? Such a failure of method would tend to undermine the rest of your analysis.

      As for the appropriate catchphrase, I’m fine with “economic inequality.” Last I checked, the value of one’s home is an asset, so “income inequality” isn’t the right phrase. Of course, to some, I suppose it matters deeply if one’s home is underwater and the bankster weasels are at one’s throat as a result of “the central goal of fostering inequality” as opposed to “a choice in the middle of a crisis” but to most… Not so much, I think.

      1. Kevin Egan

        To pick up on an implication of Lambert’s post, we don’t actually need the Barney Frank story to condemn Obama: we just need to compare him to FDR in the most analogous situation, and FDR imposed a moratorium on foreclosures as one of his earliest executive actions.

        That was a very accurate indication of where FDR’s heart was; Obama’s decisions are an equally accurate indication.

    5. issacread

      Huh? Sounds to me that you imply for Obama to be witting is sensationalistic, whereas W’s “intent” was to redistribute income, etc. In my book such intent resides above the POTUS for both parties and often outside the purview of elected officials of the US. Indeed I’ve come to see the POTUS thanks to Obama as a sort of NATO bureaucrat.

    6. Yves Smith

      I gather you don’t like data. Funny how people who are wedded to a narrative deny facts.

      Obama had a filibuster-proof majorities in both houses, remember? He did nothing to roll back Bush era tax policies when he had the chance, and his “tax the wealthy” proposals since then have been pure optics (see Linda Beale for details). Obama’s top second term priority is gutting Social Security and Medicare. But you’d rather fantasize that he is on your side.

      1. Lambert Strether

        Given the 2008 mandate, The Greatest Orator Of Our Time also had the muscle to get Reid to invoke for real the “nuclear option” that the Rs always threatened, and change the Senate rules for a two-thirds requirement with a simple majority vote (thereby permanently disabling the odious Joe Lieberman, a delicious side effect).

        Since Obama didn’t do that, there were clearly other factors that ranked higher for him than, like, actual legislation that had a hope in hell of working.

        (Let’s also not forget that FDR set up the WPA by executive order. So, Obama The Constitutional Scholar can bypass due process entirely with his weird dreamed-up “nomination” process, but can’t use powers that are available to him. Of course, whacking OBL in an election year is one thing, but preventing people from losing their jobs, their health, and their homes is another. Priorities!)

      2. run75441

        Hi Yves:

        Granted Obama is a wimp the same as most of the Senate Dems. I did have a chance to talk to Senator Durbin for a a minute with the lady from the Banksters Blog to get the point across at Showdown in Chicago. In so many words:

        “When is the party of the majority going to start to act like the party of the majority rather than the party of the minority?”

        To that there was no answer.

        Be that as it may, you and lambert seem to forget Lieberman (the senator from Aetna), Snowe, Nelson, and the rest of the blue dogs cohabitating with the minority Repubs to get their way. There was quite a bit of wheeling and dealing. Single payer, universal, and Medicare for all were pretty much dead on arrival without their support and without a vocal president taking the lead. Congress also owes much to the financially strong healthcare insurance industry and Repubs do not like government programs. And now, Lieberman wishes to raise the age for Medicare?

        Ezra Klein sums it up rather nicely “Death of the Public Option” http://voices.washingtonpost.com/ezra-klein/2009/12/the_death_of_the_public_option.html

        and here:

        “Senate Healthcare Bill unlikely to have Medicare Buyin” http://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121401580.html?hpid=topnewshttp://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121401580.html?hpid=topnews

        So who would we have for president? The granting of dignity for welfare mothers through working Romney or a rudderless Obama who has lost his memory of how he got into the presidency?

        1. run75441

          Some of my reply applies to the healthcare arguments going on later in this thread; but, it and the balance is the general process we have been seeing over the last 4 years in Congress. The Repubs say knock this chip off my shoulder and the Dems say “Oh Dear; what do we do now?” The Dems do not have a Mr. Smith in Washington today who will take a stand.

        2. Doug Terpstra

          Obama is no wimp. Attributing to incompetence, ineptitude, and cowardice his hundreds of scandals, betrayals, and war crimes may be comforting, but the totality of evidence is simply too overwhelming for that to be remotely feasible.

          Now, finally, Obama’s personal supervision of America’s death squads, and manifest pride in it, must put an end to the wimp argument. See Chris FLoyd’s “The NYT’s Love Letter to Obama’s Murder Racket”
          http://www.chris-floyd.com/component/content/article/1-latest-news/2247-hymns-to-the-violence-the-nyts-love-letter-to-obamas-murder-racket.html

          Obama has crossed a very sharp, spiked line with no return, and anyone defending him now is clearly part of the problem.

          1. run75441

            Doug:

            Please excuse my language. Obama, McNamara, etc were f*cken wimps. They are not nor were they f*cken there even though they gave the orders. They did not execute the orders, people like myself on the ground and 10, 20, 30, 40, 50, etc feet away executed the orders. It is all to easy to give an order and not have to execute it.

            Spare me your comfort BS as you do not have a handle on what your are discussing with me. Obama is a wimp like boy-George was and McNamara was. there are no consequences for them and there was for me.

      3. leafleaper

        Oh I AGREE that trusting O’s promises do do anything AT ALL substanitive for the 99% is like trusting the promises of reformed behavior from a wifebeater. I don’t think we can trust O to advance a solution for the 99% at all.
        The thing to do it to elect a solidly Democratic House an Senate, and vote for Obama.

        Then see if he has the stones to veto progressive legislation.

      4. Joe Firestone (LetsGetitDone)

        Not to mention that O could have had Harry Reid get rid of the filibuster at the beginning of the session in 2009. Reid would have done anything Obama asked him to do then. All O had to do was wave his polls at Harry and ask him if he really wanted to run without White House and DNC help in 2010. Without the filibuster, O could have passed a second New Deal before the Rs could stop him. He could have stopped the changes to the mark-to-market and then taken the big banks down too, and thereby put Wall Street out of the game of politics for at least a few years.

    7. LucyLulu

      “blaming Obama for an imagined outcome of a policy”

      Re: “imagined outcome”

      In 2010 (latest figures seen), 93% of the increase in income went to the top 1%. The other 7% increase in income was split among the 99%.

      Common sense dictates that if one sector has their losses socialized they will see their incomes increase relatively to the rest of the population, all else being equal. And the sector that got bailed out didn’t shed jobs the way the rest of us did (the peasants who were tellers, yes, the well-paid finance folks, not so much). They were ready to go with the next phase, unwinding all the loans made to people that could never repay. They started in the 1% so they only could go up. Obama may well not have known just how lucrative the foreclosure racket would turn out to be, though.

  9. briansays

    same thing happened on health care
    we could have had a public option to go along with the mandate to control costs
    the House bill had it
    Obama caved to a hand full of Democrat Senators
    Baucus, Lincoln, Nelson and Lieberman

    1. Jill

      briansays,

      Again, you have the order of things backwards. Obama took universal single payer off the table and told Congress they would be doing that too. There is a record of events which took place. It is searchable and verifiable.

      Obama did not cave to anyone about anything. He is doing what he’s told but he’s first in line to block every sane thing that could help the people of our nation.

      1. Lambert Strether

        Jill, you said it so I don’t have to say it. I’ll add further that ObamaCare is RomneyCare, and that both were designed at the Heritage Foundation explicitly to destroy any prospect for single payer, and that it’s good, mild-mannered NPR-listening “I’m not a racist!” career “progressives” who ran interference for Obama as he did just that, by shutting single payer out of the discourse, and censoring and banning its advocates.

        As for the so-called public option, a neo-liberal construct vacuous except for the single detail of putting the health insurance companies at the heart of any proposal, the career “progressives” flogged that into the discourse as well, and Ryan and the Rs are have proposed to privatize Medicare by making it a “public option.” And if it’s so great, why shouldn’t they do just that?

        1. TK421

          Obamacare is Romneycare?!? What outrageous slander!

          “Obama: We thought that if we shaped a bill that wasn’t that different from bills that had previously been introduced by Republicans, including a Republican governor in Massachusetts who’s now running for president. That we would be able to find some common ground there.”

          http://fdlaction.firedoglake.com/2010/11/08/obama-again-admits-his-health-care-law-is-republican-not-progressive/

          Vote for the Republican, get Republican policies. Vote for the Democrat, get Republican policies. And people wonder why I’m not planning on volunteering for Obama.

  10. jsmith

    This kind of crap only serves to distract the public and keep them from seeing that EVERY SINGLE one of these people are guilty of creating this mess.

    What, am I a courtier?

    Am I supposed to be riveted by the he-said/he-said horsesh*t?

    No, he ditnt!!

    Leave this kind of crap to the robotic talking heads and historians to discuss.

    It adds nothing to one’s understanding of the completely corrupted nature of our system.

    When the elite present us with these stories, the response should be:

    Shut up, where’s our money that you’ve stolen.

    Shut up, you’re all going to jail.

    1. monday1929

      I like that:
      “SHUT UP, Where’s our Money at?”
      “SHUT UP, Your’re All going to Jail!”

      It is true that debating the finer points of Treason is a distraction, but may be necessary to get people to the point of being ready to (peacefully) overthrow a perverted system.

      1. jsmith

        Yeah, I know but people have to first realize that no matter what the topic the blatant criminality of the elite is a guaranteed and that in creating a litany of crimes we’re just playing catch up while they continue to murder and steal.

        I mean, with the War on Terra, where does one even begin listing all the war criminals both past and present and the plethora of various war crimes they have committed?

        Glenn Greenwald – for example – does an admirable job of articulating the reasons that our leaders are all war criminals but after a while even the most patient and meticulous of chroniclers just has to scream, “That’s it!! I’m full! I just can’t digest one more bit of murderous villainy! F*cking hang them all!”

        The same can be said of the financial crisis.

        Every hour of every minute of every day for the last 4 years has revealed yet ANOTHER aspect of fraud and corruption and although some may revel in the details I really don’t need to hear the details as we’re all too familiar with how the story ends – the common person gets screwed and the rich walk away aggrandized.

        Until the majority of people realize that there’s really nothing to debate or take note of anymore, the longer we’re going to have to wait for the system to end.

        The system is run by criminals for criminals breeding more criminals along with the “externalities”: murder and theft.

        1. jsmith

          Adding:

          One of the “benefits” I alluded to of this constant need for “debate” and “analysis” for the elite is that it gives them more time to keep committing the same crimes.

          Thus, in 10 years when we are invading China or whatever f*cking madness we are embarked upon then, the media of the day will be “debating” whether or not Iran really did have a nuclear weapons program before we ended up invading that country in 2013.

          That’s why it’s incumbent upon people to presently cultivate an attitude towards our “betters” of “NO MORE DEBATE! NO MORE EXPLANATION! IT STOPS NOW!”

  11. Francois T

    One can easily guess the scornful reply of the Obamabots:”Republicans would’ve done much worse.”

    Never mind that it was Paulson, a Republican, who proposed the write down.

    1. TK421

      “Republicans would have done worse” or “Obama sang at the Apollow theater” or something else just as substantive.

  12. Hugh

    “I’ll tell you what, I’ll ask for that second chunk and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it”

    There are several things to note here. First, as others have commented, Frank was a major villain in the events leading up to and following the 2008 meltdown.

    Second, the TARP was structured on a political deal in which Bush/Paulson controlled the first half of the $700 billion and Obama would control the second half. So if Obama and the Democrats wanted something done out of their half while Bush and Paulson were still in office they would have had to have given Paulson an explicit OK to do it.

    Third, what Frank is saying is that Paulson wanted control of all of the second half in exchange for using only some of it for writedowns. That from the get go was a nonstarter.

    Fourth, Frank is talking about an unspecified fraction of $350 billion to cover an $8 trillion bubble with CDS risk also in the trillions. That’s a pretty small hammer, relatively speaking, for a very large nail.

    Fifth, I haven’t a clue as to how Paulson could have leveraged any of the TARP money for writedowns. You have to remember that Bernanke was buying up a trillion dollars of this dreck. Some of it had to be over-collateralized, if memory serves, but the advantage for the banks wasn’t they never had to admit that the dreck was worth less than face value. Such an admission is what the banksters and their paid for outgoing and incoming Presidents wished to avoid at all costs since this would have necessitated a revaluation of their whole mortgage portfolios and exposed their underlying insolvency. I mean this was the whole point why writedowns and cramdowns were never done, and still are not being done.

    1. bdy

      Din’t we allow the TBTF’s to quit mark2market re the $600+T on the books in shit derivatives?

      Can mark2market relief not apply to losses in future mortgage payments and whatever devaluation of already non-priceable related paper follows?

      Is there something I’m missing here? Because refusing to write down looks less like saving financial institutions from ruin, and more like allowing them to expand from the value of bullshit derivatives and big-assed bonuses into the value of peoples’ homes via foreclosure.

  13. Marsha

    Well, I just gotta say it. Let’s get rid of Obama and all his people. Barney Frank would have been voted out this time, so thankfully, he retired. Obama’s think & do nothing began in the transition and has continued for his entire term, along with his 24/7 campaigning. Vote them all out. I definitely prefer the “football” thinking.

  14. LadyLiberty

    Wait until you see what else team obaMAO has been up to

    As the Wall Street Journal reported Thursday:

    Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading — not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net.

    http://online.wsj.com/article/SB10001424052702304840904577422393164106270.html

    via
    http://www.zerohedge.com/contributed/2012-05-26/encore-bailing-out-big-banks-government-backstop-derivativees-clearinghouses-

  15. TK421

    Right now I’m picturing Barack Obama and David Axelrod having a chat about Matt Stoller in a flourescent-lit office somewhere while a drone turns in a holding pattern, Hellfire missiles hot.

    Of course, Mitt Romney has a Swiss bank account, so that makes it alright.

    1. Lambert Strether

      Atrios should like this this:

      Ko-Ko.
      And that Nisi Prius nuisance, who just now is rather rife,
      The Judicial humorist — I’ve got him on the list!
      All funny fellows, comic men, and clowns of private life —
      They’d none of ‘em be missed — they’d none of ‘em be missed.
      And apologetic statesmen of a compromising kind,
      Such as — What d’ye call him — Thing’em-bob, and likewise — Never-mind,
      And ‘St— ‘st— ‘st— and What’s-his-name, and also You-know-who —
      The task of filling up the blanks I’d rather leave to you.
      But it really doesn’t matter whom you put upon the list,
      For they’d none of ‘em be missed — they’d none of ‘em be missed!
      Chorus.
      You may put ‘em on the list — you may put ‘em on the list;
      And they’ll none of ‘em be missed — they’ll none of ‘em be missed!e of ‘em be missed — they’d none of ‘em be missed!

  16. Accrued Disinterest

    “I’ll us some of that as leverage on mortgages.”

    Anyone wanna buy a bridge?

  17. Z

    “In other words, policy does matter, and Obama had a variety of choices and leverage, and he did what he thought was best.”

    Yeah, he did what he thought was best for him and the banksters that sponsor him.

    Z

    1. Eric377

      How out of touch can you be? The write downs here were TARP funds that simply paid banks the marginal dollars on loans that would otherwise have been very problematic in collecting. Of the many things there are to complain about Obama, this is not much of one.

      1. Z

        How out of touch am I? Do you think that obama has been doing what is best for the majority of the people in this country regardless to the cost to the banksters? To himself? If you do, how out of touch are you? What country … what planet … what galaxy do you inhabit? Fuck …

        Z

  18. Glen

    Obama has consistently supported the banksters that created the economic implosion. He claimed he wanted to be transformational President, but when he truly had his opportunity, he shit on it and the American people.

    1. Kevin Egan

      He’s been transformational alright–he’s almost completely co-opted the most reliable progressive wing of the Democratic Party, the African-American community, even as his policies sell them out completely.

      1. TK421

        There was a time when Democrats would have been outraged at a presidential kill list. Not anymore, thanks to Obama.

        1. Jill

          Well TK421, I listened to NPR’s Robin Young yesterday. She told me about how people consider Brennan a “priest”. Did you know that he and Obama coffee klatch over St. Thomas Aquinas and the just war? Did you also know that Obama personally approves every drone strike, even asking how old the people are that he’s going to kill? Seeing as he’s hit several 16 year olds on purpose and plenty kids younger than that (due to defects in prosecuting his just war), I’d have to say the man is a true mensch!

          P.S. She also mentioned a second, more secret drone program that Obama doesn’t take an interest in. I was unclear why such a caring individual as he, trying valiantly to avoid civilian deaths, only took interest in the one killing program but not the other. But hey, war is peace!

          1. TK421

            Just so long as the government is very careful about who they destroy with missiles fired from aircraft miles away, remotely piloted from the other side of the planet, it’s alright with me!

            When has the government every sentenced innocent people to death? When have military weapons ever hit the wrong target? When have politicians ever lied about the inflammatory things they have done? No reason to worry, move along, folks! Time for the three-minute-Romney-hate.

  19. Eric377

    This was not such a big mistake I think. Such write downs would have been wildly unpopular once many Americans began to understand that help was available only if you didn’t do something really idiotic like losing your own money on a house. “We’ll help you out provided you send it all to your lender” isn’t that inspiring. Plus the amounts in a late 2008 and early 2009 mortgage relief would have been squandered in very large measure as the equity position of borrowers was still much higher than they eventually became.

  20. steelhead23

    Perhaps everyone on this comment string has been here long enough to understand that the decision to allow foreclosures to abound is destroying whole cities. Detroit anyone? Look, at one time, I too thought the best solution was to let the usual process work the bad debt out of the system – foreclosure – bankruptcy, deflation, bank reconciliation, etc. But note – this is NOT what has happened. Instead, everything imaginable has been done to prevent/forestall bank bankruptcies – and yet, individuals and families have gotten almost nothing in return except debt servitude. Is Obama worse than Bush on economic issues? I am very close to saying yes, mostly because I am convinced that Obama does not care, even a smidge, about the welfare of the American people. Bush did and would have by now, tossed a few of the most egregious actors in this tragedy, under the bus. But that’s idle speculation. What is clear is that Obama is not going to do anything to harm those who bankroll him. Nothing.

  21. Warren Celli

    Never have so many been conned by so few.

    It is not Barney Frank or Obama that are the problem.
    Look in the mirror.
    It is the voter that is the problem.
    It is the voter that validates and legitimizes the crooked system with his or her attention and vote that is the problem.
    It is the voter that is complicit in his own murder that is the problem.
    When you sit down and play at a known crooked gaming table you deserve to lose.
    When no one plays the crooked game the house loses.
    When people proactively boycott the vote the crooked government falls.

    Never have so many been conned by so few.

    The difference between Obama and a fascist is that the fascist will look you directly in the eye and tell you that he is superior to you and he is going to enslave and kill you. Obama will look you directly in the eye and tell you Noble Lies of hope and change while he works to the same end — to enslave and kill you.

    Never have so many been conned by so few.

    Deception is the strongest political force on the planet.

    1. Eureka Springs

      When only thirteen percent of the registered voters in my state showed up to vote for O or Rom…another 7 to 8 percent for/against others in last weeks primary…. I realized once again just how few it is who do keep participating and just how wrong this system is from the ground up if 13 to 21 percent can have the power to keep us here. I also took great comfort in the fact 80 percent would not play along.

      Anyway, it’s that 13 to 21 percent who need constant ridicule and scorn, imo. I say that as citizen who deserved it for most of my life.

    2. skippy

      Freedom of choice!

      The song itself gives a clue to what this means in the lines:

      “Then if you got it, you don’t want it -

      Seems to be the rule of thumb”

      Meaning that it’s human nature to want to be rid of the burdon and the responsibility of having to make choices that always comes with having freedom of choice. You may have freedom of choice, but knowing what are the RIGHT choices to make, that is a burden every human being must face.

      http://www.youtube.com/watch?v=dVGINIsLnqU

      Skippy… personally, I have no plans of going down with the ship.

  22. Schofield

    Utterly clueless Neo-Liberals. First they allow the Banksters to inflate housing costs in the real economy which after the bubble has burst reduces demand in the real economy. Along comes the opportunity to put some demand back in and they blow it. Probably just as well since most of the money would have gone to the Chinese and American Corporations investing in Chinese exports to the States. Out-sourcing volume manufacturing another great Neo-Liberal idea for reducing demand.

    1. rotter

      Is it clueless or care-less?…take the acronym TARP for example.A bit of gallows humour all at the expense of the people under the tarp..not the jokers who named it

  23. Benedict@Large

    [1] Now we know why the banks never made any meaningful efforts towards writedowns. The banks must have already known that no matter what Obama was saying in public, he had already rejected writedowns. All that was left was to chump the people into believing it wasn’t Obama’s call.

    [2] And of course, if Obama calls for writedowns up front, the entire Robo-Signing scandal that is eating people and courts alive would never have occurred.

  24. Doug Terpstra

    Two words, Matt: “predator drones”. And well done! You have indicted Obama quite effectively and deservedly.

    A succinct post-mortem of a great crime: “There were policy debates within Obama’s economic team about what to do about the mortgage crisis. The choices were to create some sort of legal entity to write down mortgage debt or to allow the write-down of mortgage debt through a massive wave of foreclosures over the next four to six years. He [chose] the latter. That choice was part of what led to roughly $7 trillion of middle class wealth gone, with financial assets for the elites re-inflated.”

    This was deliberate and it’s been evident in all of Obama’s policy choices time and again without exception — in protecting the bonuses of bankrupt banksters, in failing to prosecute fraud or war crimes, in TARP, HARP and HAMP, in the fraudclosure amnesty settlement, in the bailout of death panel profiteers (Obamacare), etc. The pattern is stark, and if he wins a second term, it will certainly play itself out again with “saving” Social Security for Wall Street. That is the moneychangers’ Holy Grail, the great quest for which the Trojan Horse was groomed and [s]elected.

  25. Lafayette

    SIDELINE JOURNALISM

    So yes, Barack Obama is worse than George Bush on economic inequality

    Stoller does not seem to understand either what a Ponzi Scheme or an Equity-Value Bubble is.

    After all, he assumes that just because someone bought a mortgage, they chalk up the total amount as Total Equity Value. When the Net Equity Value of the household was the down-payment and with predatory pricing in wide-practice, that was almost zilch.

    So what possible affect could that have on Income Inequality – if what happened had nothing whatsoever to do with Income?

    It has everything to do, however, with Net Worth. And Total American Net Worth had started plummeting long before Obama came to office. See chart here.

    MY POINT

    This sort of snide journalism from sideline-journalists could ultimately do Obama a lot of harm. Which, of course, means it could help the Romney Guy make it into the White House.

    So, yeah, right … surely we’ll all be better off when the the Romney Guy, the epitome of the OnePercenter Class, is running America!

    POST SCRIPTUM

    Stoller missed an excellent opportunity to write nothing … he is taking a an historical fact out of context in order to blacken a presidency. (And the guy is already half-black! ;^)

    1. Hugh

      Hysterical. More Democratic tribalism. Kleptocracy has been going on for the last 35 years. It has been completely bipartisan. It doesn’t make a whit of difference if Romney or Obama is elected. Ordinary Americans are screwed either way. We will get the same corporatist neoliberal policies in economic affairs, surveillance state ones elsewhere domestically, and neocon ones internationally. The only difference between the two parties is their rhetoric. Some find Republicans more irritating this way, some, Democrats. But in substance they are the same. And yes, Obama can be worse than Bush, just as Bush was worse than Clinton and so on back to Carter where kleptocracy went from being a noxious trait in our society to being its fatal disease.

  26. sierra

    So much for Obama’s “transition” team which included the clowns that had made it a career to destroy “democratic capitalism”……over the past 30 years.
    Obama made very poor choices in that transition team and we are experiencing his own naivete, and the dark minds of those who advised him in that time…….mostly Larry Summers who in my opinion should be banished from the US.
    But, if citizens don’t pay any attention to their government(s), then they have no one to blame but themselves.

  27. hangemhi

    One comment from Frank about the TRANSITION period when Obama clearly had no clue what a post-bubble economy looked like since no one else did either (well, very, very few did), and this makes Obama worse than Bush? Wow.

    First, the outcry against the assumed culprit back then… sub-prime dumb owners… would have never allowed this to go through. Second, income inequality was a steady moving stream that became a water fall before Obama took office, and the few things he’s done to try to stem the tide have had the GOP going ape s*** trying to stop. Third, Romney is OPENLY campaigning on tax cuts for the wealthy, and spending cuts to for programs that the poor and middle class rely on. And he sure as hell isn’t campaigning on mortgage write downs or anything to do with homeowners… in fact he almost never mentions housing.

    So while Obama could have done a TON of things better, lets keep this is perspective.

    Lastly, homeowners have always had the choice to default. Why they haven’t is beyond me. If you defaulted in 2009 you’d be 3 years into improving credit, and have 3 years of some level of savings. This is actually Romney’s only suggestion from what I can tell… and had homeowners walked away enmasse, I’d bet we’d have real Gov action… instead of voting at the ballot boxes, people should have voted with their feet.

  28. billybob

    A lifelong Democrat, Obama and the Congress critters cured me entirely of that affliction. I have to thank the O-man for that. I will likely never vote for either of the major party candidates for president again.

    If everyone simply abandoned the Duopoly party, they would no longer have we the people to kick around any more.

    A Dem fund-raiser called me the other day. I gave him a long piece of my mind about Obama, the banks, the economy, and his joke of a justice department. Let him know that I thought Obama had not restored the rule of law to the land. Better and easier to bust a pot grower simply trying to make a living than the pieces of dirt who wrecked the global economy. He pleaded with me to not let Romney win. Sorry I told him, but I will not support complete dysfunction. Both parties suck. Perhaps the Dems a little less than the Repubs, but they’re pretty much the same damn thing. The same thing.

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