Treasury Bars Use of TARP Funds to Help Borrowers Facing Foreclosure

If you had any doubts about whose side the Administration is on, this story should settle all doubts. From the Nation:

Consider this: the recent Fed audit revealed over $3.3 trillion in emergency assistance to the banks and other corporate behemoths during the financial crisis–no strings attached….

Then consider the 19 states which are recipients of the Hardest Hit Fund (HHF)–a portion of TARP money set aside to help homeowners in states struggling with the highest unemployment rates and steepest declines in the housing market.

Some of those states, including Ohio, let Treasury Secretary Tim Geithner know as far back as this past spring that they wanted to use some of those funds to assist legal aid groups that help individual homeowners….

Treasury solicited the opinion of an outside law firm, Squire, Sanders & Dempsey. Never mind that the firm’s clients include BB&T Corporation and payday lender CNG Financial Corp. The firm said, in essence–sorry, no can do on the legal aid. Not permitted under the TARP.

Huh? Hold on a sec–is this the same TARP that granted the Treasury Secretary all those “extraordinary powers” to protect people’s home values, preserve home ownership, promote economic growth, etc.?

Yves here. The skepticism is well warranted. This isn’t an area in which a law firm would have much (any) liability on an opinion. Ergo, a combination of Treasury body language and selection of the firm would have determined the outcome. Besides, the TARP explicitly put the Treasury secretary above the law. So why is Treasury even getting an opinion? This is clearly an exercise in creating an excuse for an action it wanted to take.

The article also details actions by Rep. Marcy Kaptur and Sen. Sherrod Brown to reverse the Treasury action. Kaptur has introduced a bill (HR 5510) to amend the Emergency Economic Stabilization Act of 2008 to enable nonprofits, both counseling firms and law firms, to receive TARP funds to help single family homeowners to prevent foreclosures. Brown introduced a parallel measure (S 3979) in the Senate.

Please contact your Senators and Representative and ask them to cosponsor these measures. And annoy Treasury by calling or e-mailing them (try the Domestic Finance and Economic Policy contacts) to tell them they are on the wrong side of this issue.

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  1. profoundlogic

    Yep, providing legal-aid and assistance to homeowners isn’t good. Instead, we should hand over a few trillion to the crooks who are doing their best to bankrupt the planet and destroy any future for our children. Then they can spend a few hundred billion on executive bonuses. After all, they’re smarter than the rest of us, and they are doing “God’s work”.

    Let the subpoenas fly Representative Paul!

    1. F. Beard

      After all, they’re smarter than the rest of us, and they are doing “God’s work”. profoundlogic

      I read the Bible (mostly the Old Testament so what I read applies to Jews too) and I understand fractional reserve banking. Any FR banker who thinks he is doing God’s work is sadly mistaken, IMHO.

      1. john haskell

        From my reading of the OT, anyone who thinks he is doing God’s work, but who wears a cotton/poly blend, is sadly mistaken. IMHO.

        1. F. Beard

          From my reading of the OT, john haskell

          Obviously a superficial one. I wonder if that nit was placed there just so you could trip over it? You should continue reading till your respect grows.

          anyone who thinks he is doing God’s work, but who wears a cotton/poly blend, is sadly mistaken. IMHO. john haskell

          Obviously. 100% cotton is the only way to go, at least for shirts, underwear and socks. Speaking of cotton, have you noticed that no man-made fiber can equal it for comfort? Perhaps until man can duplicate that, he should be a bit more humble?

          I’m not an expert on the prohibition but it has made sense to me at times, at least in a figurative sense. In a practical sense, the different shrink characteristics of at least some mixed fibers would ruin a garment.

          If you wish to mock a Book that condemns usury, theft and oppression of the poor and commands justice and debt forgiveness well then good luck dealing with the banksters particularly since it is the foundational religious document for many of them.

          1. Jack Rip

            I am as versed in the OT as your priest or rabbi. I would be happy to get a reference for FRB. As for cotton, blending of assortment of materials for clothing is a no no. In the original biblical language, it is called shatnez. I wouldn’t know much about its current application.

            One thing for sure, OT wise, Obama’s shenanigans are considered major sins by all prophets (socialists them all with Jesus as party member as well).

          2. CingRed

            Socialists all?? Could you please point out where it says that a government or religious ruling body should forcefully take the wealth of one person and give it to another that the government or religious ruling body deems in need of it rather than the individual? While the desired outcomes of what the prophets and socialists espouse look similar, the methods by which the are obtained is vastly different. Somewhat akin to the desire to have a standing army. You can get it with a draft or a volunteer system. You get the army in both cases but the methods are quite different. What socialists espouse is the draft while the prophets espouse is the volunteer.

  2. Fannie Schmuck

    If you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the Troubled Asset Relief Program, please contact the SIGTARP Hotline!

    Phone: 1-(877) SIG-2009

  3. DownSouth

    What does the Obama administration think it has to gain by declaring war on working- and middle-class Americans?

    And why now?

    It looks like Obama never misses an opportunity to kick people when they’re down, at least if they’re common folks and not some TBTF financial institution.

    Zillow announced today that American home values tumbled by $1.7 trillion in the last year. If we divide that by the approximately 78 million homeowners, that’s an average of $22,000 each. Zillow says 23.2% of single family homeowners with mortgages are now under water.

    The average savings of 50-somethings is only $29,000.

    How does all this add up? How is it going to end?

    1. Jason Rines

      Here is how I think it goes Downsouth. Continued Mussolini Fascism until 2013 when the investment community as a whole begin funding fundamental reform. The pain of no growth becomes unbearable and is the catalyst as in other periods of history.

      A 15% structural unemployment rate after 2013 while the next two years are of pain, believe true unemployment rate will be close to 30% by end of 2012.

      Military conflict in 2013 in the ME skyrocketing oil and curbing recovery efforts. Sadly, it is in the financial best interest of some sovereigns to see this event occur.

      Korea conflict in 2015 widening into world war. Potential nuclear terrorism in one or more American cities. Big red button pushed near the end of the conflict, closer to 2020. Mankind rebuilds afterward.

  4. F. Beard

    Wow! Nothing like a shrinking pie to bring out the worst in people. And would even a bailout of the entire population work since who should get paid is muddled? Or is it only who can foreclose that is muddled in which case a bailout might still work?

    One wonders about WWI. Totally pointless yet millions died then and even more millions in WWII which it was a major cause of.

    That was only a hundred years ago. Are we much wiser?

    1. Jason Rines

      No F.Beard. While I believe a ME conflict could be contained, I don’t believe an Asian conflict would be contained. Those in charge feel differently and there will be the problem.

  5. attempter

    Wow. Not just the monumental evil of the banksters and this government, but also the sheer pettiness of their evil, cries out to heaven for justice, for moral purification, and for a sheer aesthetic cleansing.

    How disgusting they are. Even for pennies like this, the infinity of their hatred and greed, of their intolerable loathesomeness. How insufferably vile they are.

  6. kravitz

    As if anyone should be shocked.

    Tim Geithner’s friends are wealthy bankers. Not poor or middle class peons. He doesn’t know anyone struggling to make ends meet. He does know people trying to tear them apart.

    TARP is for businesses. Not citizens. Why should taxpayer money benefit taxpayers?

    I do have a bet on how soon TG follows PO to Citi though.

  7. lisamarie

    GREAT. Squire Sanders is the lawfirm representing HSBC in Fraudclosure AGAINST me. Love that they have say so about TARP!!!!

  8. Snowman

    I am very sad. I campaigned for Obama.

    Unfortunately, I can no longer tell the difference between Bush and Obama. The decider and the un-decider.

  9. F. Beard

    Unfortunately, I can no longer tell the difference between Bush and Obama. Snowman

    Isn’t it all about the Baby Boomer’s 401K’s and the DOW?

    Does anyone know what to do who isn’t discounted as a socialist?

    But socialism isn’t called for. Justice is. Tell the Right to pick up their Bibles and read Deuteronomy 15 and then explain why debt forgiveness is not even more called for these days when money and debt are created via keyboard entries on a bank’s computers.

  10. lisamarie

    Also, Squire Sanders must be a lawfirm for MERS. If MERS is on the mortgage with HSBC, that would mean Squire Sanders is their lawfirm too. How on earth does that same lawfirm have say so about TARP??? I’m just floored. My taxes are helping these folks take my property!

  11. wally

    We – and a number of European countries – seem to be moving back toward a situation much like 40 years ago when the actions of government were so detached from the wishes of people and so abusive of people’s lives that the only resort was violence in the streets.
    You simple cannot take actions that so blatantly favor one class at the expense of the well-being of others and expect that people will simply roll over and accept it.

  12. Timmy Bitch Geithner

    Since when has the Treasury department been concerned with borrowers? This is a joke. I’d like to see more articles that attack public officials within thes agencies (largely verbotten in the corporate press) debunking the illusion of Democratic process and show a light cleanly on these appointments that seem to be Teflon Dons in the US Government – allow people who post here, who are generally in the same boat, to work together, and start jamming law suits down the throats of lawfirms like Squire Sanders: “We’ll fucking take your houses you sons of bitches!”

  13. Frank

    from Matt Taibbi’s blog, Dec 5, 2010:

    “Here’s what this all comes down to, dogma or no dogma: who is going to pay for a) the Bush tax cuts b) the bank bailouts and c) the Iraq and Afghanistan wars? If you want to get there by making janitors and pipe-fitters wait until they’re 69 to retire, raise your hand. If you want to get there by making Jamie Dimon rent out his 900-foot rooftop terrace in Chicago two nights a year, raise your hand.”

    Clearly, under no circumstances, would Geithner and friends ever force Jamie Dimon to rent out his 900-foot terrace in Chicago, not even for one night a year. Far better to make the janitor and pipe-fitter work 10, or 20 more years, whatever it takes, before retirement.

    Or better still, from the Geithner, Summers point of view, the janitor and pipe-fitter might as well forget about retirement. Jamie Dimon’s kids might need the rooftop terrace for an Emporio Armani Party, while the janitor and pipe-fitter’s kids will be needed in Iraq and Afghanistan.

  14. RDE

    AIG stock up 13.7% today on news that Treasury will sell large block of stock in 2011.

    Bank of America stock up over 13% in the past seven days on news that its Countrywide division securitized 98% of its loans. (with possibly half of these being fraudulently documented.) The other news fueling this increase in value was the announcement by Wikileaks that they possess a time bomb of information that could destroy B o A.

    Kind of shows you how terrified the market makers are that justice will prevail in the mortgage documentation debate—.

  15. Doug T

    This is heart-sickening. As DownSouth notes, what can they possibly gain and where does it end? The politics and economics defy reason, resembling insanity even sadism—or monumentally petty evil as Attempter put it, worthy of a divine firestrom.

    With twisted logic, this outrage and Obama’s Republican tax scheme look like the application of the shock doctrine, inflicting the shock and awe of disaster capitalism on the American people deliberately to effect widespread traumatic paralysis. This would enable the final elimination of the New Deal safety net and the total consolidation of corporate-military power.

    Still unless such economic terrorism is properly calibrated for limited lower-caste division and conflict, or martial law is brutally imposed, the reprisals against the elite could be very bloody and unrestrained.

    1. Give Sympathize Control

      “What can they possibly gain and where does it end?”

      They can’t gain anything anymore — they already have it all. I think therein lies their problem. I recall an anecdote (probably apocryphal) involving K. Vonnegut and J. Heller at some party at a very swanky place in the Hamptons. Vonnegut asked Heller if he was peeved not to have as much wealth as the hosts. Heller replied “No, because I have something they never will: Enough.”

      There is an epidemic of people who lack a sense of Enough. And it becomes something truly monstrous when they have it All, because it still isn’t Enough. It’s like the story of Tantalus turned on its ear.

      I don’t think it’s something they can’t help, as in a true mental illness, at least not in most cases. It’s more like something cultural, something learned, a way we decided to act.

      It can only end once they lose it All, either in the sense of still having A Lot, but not quite All, or as in losing it All. And then those with a sense of Enough must make sure those who don’t never end up with it All again.

  16. ITDog09

    This is somewhat related.
    Last weekend I had the good fortune of being hounded into watching two documentaries back to back. First I watched, War on Democracy. I caught this online. Next I watched Shock Doctrine thru Comcast. That the move not a talk by the author.

    After watching these two documentaries, all the news sounds the same to me. Unlike Chile or Iraq, we’re not going to get an overnight shock with tanks moving thru the streets and thousands of disappeared. Make no mistake those chickens are coming home. But it is going to be a steady march towards free market Friedman economics. Unless this is stopped, we are headed towards a far, far, different America.

    No, don’t expect Treasury to help any little guy or gal. It’s not in their philosophy, it’s not part of the game plan. Indeed, “If you had any doubts about whose side the Administration is on…” But it’s not this administration, the last administration, or even the next one. It’s the handful of folks who have become richer than God who are pulling the strings, tilting the board, remaking the nation to fit their greedy, heartless intentions.

    1. psychohistorian

      I doubt the rich would taste very good actually. What I would like to see is the end of inheritance as it is. Take away the money of the rich and do not allow them to build family legacy’s and then maybe talent will rise on the basis of merit rather than who’s daddy made a killing in the last bubble….or in the case of the real rich it stretches back through world wars.

      Let only enough inheritance pass through for a parent to guarantee that their children do not starve……not enough to own the banks, corporations, politicians and media.

      It only takes the will of the bottom 90% to make it so but unfortunately many of them have been and continue to be brainwashed by the educational system and media to act against their best interests.

      It kinda makes you wish for a Rapture, doesn’t it?

  17. Procopius

    I’ve been trying to find some clarification of the stories, and all I have been able to come up with so far is anger over how much was “given” to the banks. In passing, many of the stories refer to the various programs as “loans.” Aha! How can I find out if all this money was simply given to the big financial institutions or was it loaned to them and subsequently paid back? Or has some of it been paid back but some obviously will never be? Or was some of it used to buy overpriced CDOs, which are still on the Fed’s books at inflated prices? Or… well, do you see what I’m getting at? The Timmy Geithner keeps telling us we lost hardly anything on TARP. Frankly, I don’t think $28 billion is “hardly anything,” but how about the other programs? And what about the loan guarantees? Have any of them expired yet? Or are we still on the hook for $9 trillion of the b8g ninancial firms’ liabilities?

    1. Jim

      Me too. I’d like to know more about the PPIP program and what those assets are that were bought by private investors with the help of the government? And if it is real estate how they determined prices for the give away? Also if it is REIT’s that now control these assets and how have the values of those assets changed

      1. monday1929

        The “assets” are worth 0-30 cents on the dollar. There are many trillions in losses hidden, and trillions more to come in the next down wave. It has become obvious who will pay for those losses.
        I foresee a movement among older Boomers who will kill themselves when facing severe health problems, but will take-out a couple of the elites before turning the gun on themselves.

  18. Jim

    “they wanted to use some of those funds to assist legal aid groups that help individual homeowners”

    I think Timmy’s Geithner must have asked his bankster handlers about the use of TARP funds for legal advice to homeowners. Clearly the banksters didnt’t like the idea. Why would the banksters want citizens to have any “legal advice”? This would only complicate the banks job of railroading people with rocket dockets…..

  19. Jim the Skeptic

    This is like rearranging the deck chairs on the Titanic.

    People who live in homes which they can afford will have to negotiate with the mortgage companies or move. As the mortgage companies realize that the government will not be picking up the tab, they will be forced to negotiate. Let’s get on with it.

    This is distraction from our much more serious problem with the economy which is unemployment!

  20. F. Beard

    I would be happy to get a reference for FRB. Jack Rip

    Since the purchasing power for all FR loans is taken (or borrowed without permission at the least) from all money holders then “Thou Shalt not steal” is the obvious command.

  21. F. Beard

    One thing for sure, OT wise, Obama’s shenanigans are considered major sins by all prophets (socialists them all with Jesus as party member as well). Jack Rip

    I have to agree with CingRed on this one; the Bible is not socialist. However, if we obeyed it, there would be little need for socialism anyway:

    “You shall not charge interest to your countrymen: interest on money, food, or anything that may be loaned at interest.”

    “You may charge interest to a foreigner, but to your countrymen you shall not charge interest, so that the LORD your God may bless you in all that you undertake in the land which you are about to enter to possess.” Deuteronomy 23:19-20

    Personally, I believe a true free market in private money creation would crush most usury so that’s all I would insist on for public policy.

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