Coronavirus Consequences: Evictions Expected to Spike

"Large populations of educated under-employed people are very very dangerous to the social order" while "Jeff Bezos is having a very good crisis" —  Krystal Ball, Saagar Enjeti and Joel Kotkin discuss how screwed people will be, especially young people, when the active coronavirus era ends.

by Thomas Neuburger

"What will we break if the next thing that breaks is us?"
—Yours truly

As regular readers know, I've been concerned about the "coronavirus endgame" in this country for quite some time. "What will we break if the next thing that breaks is us?" is a question that's always on my mind (see "Covid by Country — America Leads the Pack"). People are going stir-crazy; I see it all around me and I live in one of the saner cities. Yet we're looking at a relentless 20,000 new cases per day, every day like a clock, while other, saner nations, France for example, are seeing drops of up to 90%.

Readers of this site already know what the medical outlook will be if the country opens too soon or too quickly (for example, check out "You May Think/Wish You Are Done With The Pandemic... But That Is Not How It Works").

But the financial consequences of a prolonged coronavirus closure will be even more devastating. In the video above, futurist Joel Kotkin discusses the problems that will be faced by the young, by those in the inner cities, and especially by those who work in hard-hit industries like hospitality. Put simply, a great many people who are currently sustained by unemployment benefits, will lose those benefits while also losing the jobs they expected to return to when the crisis ends.

But the biggest worry isn't lost current income; it's the additional overhang of massive private debt, a burden that weighs heavily on almost every adult in the country. How will out-of-work or newly part-time Americans pay their mortgages, their rent, their student debt, their credit card debt, their medical debt? Again, put simply, they won't.

And if they don't, what then? It's a core principle of the Obama era that "no creditor shall be harmed by an economic crisis." Millions lost their homes in the foreclosure crisis of 2008, but after the collapse of Lehman Brothers, no banker or holder of worthless casino-like derivatives was not made 100% whole, not Goldman Sachs, not AIG, not any of them.

This time round, the government, with bipartisan approval, is already throwing cash at big businesses to keep them afloat — David Dayen calls it a "money cannon" — and this is especially true in the bond market, where the Fed is backstopping almost all corporate borrowing (see this excellent analysis, "Corporate Rescue: How the Fed Bailed Out the Investor Class Without Spending a Cent").

Dayen: "Boeing, the basket-case aircraft maker with a sketchy record of keeping planes in the sky 'rejected' a federal bailout after issuing $25 billion in bonds. But that bond issuance was entirely made possible by the Fed’s implicit guarantee of corporate bond markets."

No non-connected human with unpayable debt will be treated like Boeing when the viral wave recedes or the economy opens.

Yet millions will need help. For example, under the headline "Evictions expected to spike as states end moratoriums that offered relief during COVID-19," USA Today writes, "Twenty-four states are processing evictions again, and that number is likely to climb to at least 30 states by the end of June."

Not all renters in those jurisdictions are vulnerable. Nearly 30% continue to be protected by a federal moratorium under the Coronavirus Aid, Relief and Economic Security Act that will remain in place until July 25. The rest ... live in properties that are either not subsidized by the federal government or are owned by landlords with loans that are not federally backed.

For these unprotected renters, the threat of eviction is very real – especially for those at the bottom of the economic ladder. Tens of millions of workers are unemployed, and the economy is likely to remain shaky until there’s a vaccine and consumers feel safe enough to travel, dine out and go to theme parks and movies again. Homelessness could come at any time. [emphasis added]

July 25 is close, a lot closer than this year's election in fact. Millions of "unprotected renters" — and many protected ones — will face eviction by September. Will the government treat these victims like they treated Boeing and backstop their debts by opening the Fed money window often and wide? Or, like the Obama government before them, will the good people in this government keep just the donor class afloat?

The government faces a problem. One solution, an obvious one, is to declare a debt jubilee. After all, it's rightly said that "debts that can't be repaid won't be repaid," and the economist Michael Hudson has written often that in times like these, the alternative to debt forgiveness is a depression. But there will be no debt forgiveness for actual humans if the "no creditor shall suffer" rule still holds true, and it looks from this government's actions — Congress and the administration alike — that it does.

So what will the country, its actual people, do then? Your guess is as good as mine, but it may not be pretty to watch — or easy live surrounded by.

What will we break if the next thing that breaks is us? We might break everything we can get our hands on, the collective, stretched-to-the-limit, breaking-point we. And that's before people go to the polls to vote.
  
 

What If Bernie Doesn't Run? Are There Other Good Candidates Who Could Beat Trump And Govern America Progressively?

Short answer: absolutely. If you've visited the DWT ActBlue page this year, you've probably noticed that we're still raising money for Bernie-- as well as for a small handful of other non-presidential 2020 candidates. I know a lot of people in Bernie-world. When I talk with them I ask if he's running. Everyone tells me the same thing-- maybe, although, lately, the odds (guesses?) have been better than 50/50. But what if he decides to not jump into the snake-pit?

Well, we have an on-going series, The Worst Democraps Who Want To Be President and none of them fit the bill. I'm still working on Frackenlooper but the post isn't done yet. Not every prospective candidate who I'm unethused about gets into the series. Example, I'm not a fan of a Julián Castro or an Eric Holder candidacy but I'm not going to call either of them a Democrap. Ditto for Sherrod Brown, Beto, Amy Klobuchar, Eric Swalwell. With some of them, I hope-- in fact I know-- that if I ignore them long enough, they'll just disappear off the board-- Steve Bullock, Oscar de la Hoyer, Pete Buttigieg, The Rock, the Starbucks guy... Angelina Jolie? She seems nice. I'd have to learn more about her.

My idea of a president is someone who understands and enthusiastically embraces a full-bore progressive agenda, of course. And someone with the strength of character to move a tough agenda and to be president-- opposite of Trump. And speaking of the opposite of Trump-- someone who values honesty and integrity. Does it seem like I eliminated the whole field? I don't think so. Two people I would absolutely love to see as president are Senator Elizabeth Warren (D-MA) and Senator Jeff Merkley (D-OR).

Everyone already knows Elizabeth Warren. Her name ID is through the roof. But Jeff Merkley? I feel like we need to build that up a little. This is from a Blue America fundraising letter from 2014:

Not only has he stood tall on all the important social issues, from health care to LGBT rights to the war on women, he's taken strong stands against Wall Street and the Big Banks and fought hard to preserve the signature Democratic achievements of Social Security and Medicare. You can't say that about all of our Democratic Senators unfortunately. He's been a leader on the environment and worked hard for legislation to fight climate change. And Senator Merkley is one of a very few independent-minded progressives who have taken the gutsy position of publicly siding with civil liberties advocates Mark Udall and fellow Oregonian Ron Wyden in their criticism of the Obama administration's surveillance policies. Down the line he has delivered on the progressive agenda.

In 2008, when he first ran against Republican incumbent Gordon Smith-- and beat him-- Earl Blumenauer urged Blue America contributors to back him by voting for him in a contest we were running online to raise money for the best Senate candidates nationally, calling him "a real progressive leader in Oregon and has the record to show he will be in the U.S. Senate. I've known Jeff for over two decades and watching him in the subsequent years, I know what kind of leader he will be. As Oregon's Speaker of the House, Jeff led one of the most effective, efficient and progressive legislative sessions in Oregon's history. He will continue the fight to end the war, pass universal health care and combat climate change in the U.S. Senate. Even more pressing is that Jeff has a real chance to defeat a Senator who supports the same people and policies that have gotten our country so far off course. Gordon Smith has done everything he can to hide and confuse the public about his record and recently has taken part in one of the most despicable attack ads I have ever seen in my 35 years in public service. Please help us put an end to failed policies and the politics of obfuscation and help send Jeff Merkley, a real progressive, to the U.S. Senate by casting your vote today!"

Former Oregon Governor Barbara Roberts chimed in as well. She told us that as state House speaker, "Jeff Merkley has always fought for Oregon families and has never backed down to the powerful special interests. I’ve seen him take on the drug companies and the insurance companies and win. That’s the kind of leader he’s been in Oregon and that’s the kind of leader he’ll be in Washington!" He won and she was proven right. Right out of the gate he proved us right for supporting him.

One of the aspects of Merkely's approach we particularly liked during the first Senate campaign (2008) was how dogged he was about reforming the abusive mortgage lending industry. And once he got in a position to do something about it, he's set right to work towards doing something about it. He was a big-time backer of Durbin's legislation to allow bankruptcy judges to alter mortgage agreements to keep families in their homes and quickly introduced two solid bills that were a clear vision of what a progressive perspective is when it comes to fairness in the country's housing policies and agenda. The bills sought to ban abusive practices that were leading to hundreds of thousands of foreclosures: secret steering payments to brokers who led homeowners into deceptive mortgages that they couldn't afford and prepayment penalties designed to prevent homeowners from refinancing into more affordable loans. Here's how he explained it at the time:

“Irresponsible lending practices like secret steering payments and prepayment penalties have turned home mortgages into a scam. These deceptive practices have had devastating consequences. Approximately 20,000 Oregon families will lose their homes to foreclosure this year and millions more foreclosures are expected across the country. The bills I am introducing today will help families feel confident they are receiving a fair deal when applying for a mortgage... Instead of fulfilling a dream and contributing to a secure financial future, home mortgages have become a vehicle for stripping wealth from working Americans. This new legislation will restore transparency to the mortgage lending process and help make home ownership a stable investment for families once again.”

The problem was that these deceptive lending practices, which had created a ripple effect that had a great deal to do with creating Bush's economic meltdown, were extremely profitable, so, of course, corrupt conservative politicians who were getting paid off by the banisters, opposed any and all reform measures. (Of course, those who were profiting most were sharing their ill-gotten gains with many of Merkley's colleagues.) Then, as now, the finance/insurance/real estate sector had put more money into lobbying and direct payoffs to members of Congress than any other sector-- now more than $2.75 billion into direct payoffs in the form of campaign "contributions" (since 1990) and even more billions in lobbying.

It was no coincidence then-- as it is not now-- that some of the most insistent defenders of the banksters were and are among that senators who had profited most generously from the sector. Merkley knew to expect major opposition led by half a dozen of the most corrupt members of the Senate, like Mitch McConnell ($12,899,072), Joe Lieberman ($11,477,109), Rob Portman ($10,946,983), John Cornyn ($9,331,016) and Richard Shelby ($8,311,054). These 5 are walking, talking advertisements for serious campaign finance reform. Every lobbyist in Washington knew then and knows now that these are among the most corrupt members of the Senate whose votes are always for sale, regardless of how badly they hurt their constituents-- for whom they have no respect and no regard.

Under the rules then current, mortgage lenders had been allowed to purposefully steer families into bad loans, even when they qualify for loans under affordable terms. This practice had significantly contributed to the then-current mortgage crisis. A study for the Wall Street Journal found that 61% of the subprime loans originated in 2006 went to families who qualified for normal prime loans.  Nationwide, an estimated 2 million families lost their homes in 2009.

I suspect Merkley, the only U.S. senator to have endorsed Bernie in 2016, is waiting to see what his colleague decides to do before making his own decision. With Merkley's help Oregon primary went heavily for Bernie. With the exception of tiny Gilliam County, where the vote was split 101 for Hillary and 100 for Bernie, Sanders won every single county in the state and finished with a 56-44% win over Clinton. This was the primary vote in Merkley's own four biggest strongholds:

• Multnomah County:
• Bernie- 87,247
• Hillary- 65,735
• Trump- 16,894

• Washington County:
• Bernie- 41,841
• Hillary- 36,321
• Trump- 24,057

• Lane County:
• Bernie- 41,883
• Hillary- 26,772
• Trump- 21,467

• Clackamas County:
• Bernie- 27,962
• Hillary- 26,378
• Trump- 24,884

Ready For Kamala?

Kamala Harris... Climbing by Nancy Ohanian

Tarini Parti had a cute report at BuzzFeed yesterday: Here’s Trump Allies’ Plan To Meddle In The 2020 Democratic Primary. Through 2 neo-fascist organizations, Carl Higbie's, Katie Walsh's and the Mercers' America First Policies and America Rising, Trump wants to smother strong candidates in the crib and pick a weak 2020 opponent for himself. Parti wrote that "The early move is part of Trump and his allies’ plan to dominate the Democratic presidential primary and push to have the nominating contest play out on their terms."

Wednesday night, Kamala Harris' hometown radio station, KCBS reported that she's likely to officially enter the presidential race "on or around Martin Luther King Jr. Day, probably at a campaign rally in Oakland."

The debate within her camp is how, and where, to launch her campaign. The tentative plan is for Harris to enter the race for the Democratic presidential nomination with a campaign rally, most likely in Oakland, where she was born and began her legal career.

Harris risks appearing indecisive, or worse, disingenuous, if she demurs about her plans much longer, warns veteran Democratic strategist Darry Sragow, the publisher of the nonpartisan California Target Book, who teaches political science at USC.

"If she really has decided to run," said Sragow, "my advice would be, announce. Don't drag this out."

Harris' team wants maximum exposure for her campaign kickoff, and has been scouting for a telegenic location that could give her a "Springfield moment" akin to Barack Obama's campaign launch in 2007 at the Old State Capitol in Illinois.

Harris' advisors want to avoid identifying her too closely with San Francisco, where she first made her political mark as a two-term district attorney.

"San Francisco is viewed as a very nutty place by people outside of California, and frankly, by a lot of people inside California," Sragow said.

Berkeley, where Harris was raised before her parents divorced and she moved with her mother and sister to Montreal, Canada, has also been dismissed by her strategists as not projecting the image they're looking for. That leaves Oakland, where Harris was born, and where she returned after law school to become a deputy district attorney for Alameda County.

"I'm not sure what Oakland's image is around the country these days," said Sragow, but the city, one of the nation's most diverse, is seen as on the rise. Launching her national campaign there would let Harris emphasize her roots and identify with the hardscrabble city's gritty energy, creativity and even the Golden State Warriors, who've won three NBA championships since 2015.

  The sources caution that Harris' planned rollout is still being finalized. The location and timing could change. But the current plan is for Harris to throw her hat into the ring sometime over the Martin Luther King Jr. holiday weekend, perhaps even on MLK Day itself, which is Monday, January 21.

Sragow notes that as a statewide official whose husband is a prominent Los Angeles attorney, Harris could announce her candidacy anywhere in the state, from L.A. to Sacramento to Silicon Valley.

But the sources tell KCBS Radio the Bay Area is the preferred backdrop. The next stop would probably be Iowa, where Harris would go on an introductory campaign swing to begin in earnest her quest for the White House.

Wow, does that ever sound like someone who should be kept as far from the nomination as possible! I can imagine that this is one that Team Trumpanzee is just dying to get their hands on-- unless they decide she'd be the weakest of the feasible Democrats for Trump to take on. There's virtually nothing to recommend her as a president at this point in her career. She might make a good senator, but we don't know yet.

How about PTA President instead?

So how bad? Well, I don't want to add her to the Worst Democraps series because-- as much as I hope he doesn't-- Bernie may pick her as an eventual VP. But... she's pretty bad. Yves Smith captured the essence of who she is yesterday at Naked Capitalism. "The Big Whopper season is already upon us," she reminded her readers, "in the form of presidential aspirants telling egregious lies about their track records. The Wall Street Journal tonight covers a section from Kamala Harris’ new book, in which she touts what a great deal she got for California homeowners in the so-called Federal-49 state National Mortgage Settlement in 2012. The officials who played meaningful roles the mortgage settlement negotiation should be run out of public life, rather than failing upwards, as Harris has. Hopefully, the millions who lost their homes to foreclosure will vigorously oppose her Presidential bid. But being a successful politician apparently means having no sense of shame... [I]t is fair to say that Harris got a better deal for California than the other state attorneys generals got. But that is what the Japanese would call a height competition among peanut."

The recap from the Journal:

Ms. Harris writes that under the initial settlement offer, California would have received between $2 billion and $4 billion, calling it “crumbs on the table” that would have failed to properly compensate homeowners…

Ms. Harris describes a testy phone call in early 2012 with Mr. Dimon as they discussed the deal. “We were like dogs in a fight,” she writes.

“‘You’re trying to steal from my shareholders!’ he yelled, almost as soon as he heard my voice,” Ms. Harris writes of Mr. Dimon. “I gave it right back. ‘Your shareholders? Your shareholders? My shareholders are the homeowners of California! You come and see them. Talk to them about who got robbed.’”…

Two weeks later, Ms. Harris writes, the five banks relented and eventually agreed to a settlement that year of $26 billion, which ultimately provided about $50 billion in gross relief to homeowners. California’s share of the deal reached $20 billion in aid to the homeowners, a significant increase over the original settlement offer. The agreement involved 49 states and the District of Columbia and five major banks: Bank of America Corp., Citigroup Inc., JPMorgan Chase, Wells Fargo & Co. and Ally Financial Inc

This is nonsense. Harris did get a good bit more for California but the claim that she was responsible for a ginormous increase and that the total value of the settlement was on the order of $50 billion is unadulterated tripe. The larded settlement gross number was up to $19 billion with New York and California still dickering. Even though California, by virtue of having more foreclosures than any other state, did have more leverage than other states, Schneiderman filed a MERS suit that got folded into the settlement that also resulted in more concessions.

Curiously, Harris does not mention that Governor Jerry Brown raided most of the settlement money and diverted it to fill state budget gaps, with the legislatures’s approval. Last year, a state appeals court ordered California to use the funds for their intended purpose: to help victims of foreclosures. This is now so many years after the fact that any monies will come after the former homeowners are past theh point of their most acute distress.

But the piece de resistance comes from a Jacobin story on Harris’ record:

At the time [when Harris decided to push for a better deal], Harris was under pressure from union leaders, other politicians, and housing rights activists. As one member of the progressive coalition of groups put it, “It wasn’t like she was some hard-charging AG that wanted to take on the banks”-- rather, “it took a lot of work to get her where we needed her to be.” Harris withdrew the day after these groups sent her a letter, signed on by Lt. Governor Gavin Newsom, a potential future rival, calling the deal “deeply flawed” and “outrageous.”

Even a Wall Street Journal reader was offended by the article:

Daniel Skoglund

MAGA idiots spamming this thread with BS talking points.

I’m a “librul”, and I detest Harris for legitimate reasons:

-Didn’t prosecute Steve Mnuchin when she was CA AG.

-Is meeting with Wall Street donors while she claims to be AGAINST Wall Street?

-Endorsed Hillary and met with her donor network.

She’s another corporate Democrat. I’m interested in grassroots people.

If this is the best story Harris has to tell, it doesn’t bode well to her holding up under meaningful oppo.

And... please God, we can do better than this. She needs to try being a senator for a decade or at least few years and prove she's not as terrible as many suspect. Right now, there aren't many reasons to believe she's any good-- and persuasive reasons to believe she isn't. One thing the Democratic Party does not need as a presidential candidate right now is the ultimate identity politics climber. Even on The View, most of the applause came from her identifying herself with what she really herself isn't, but desperately wants to be part of. Watch:

"Everyone Would Be Tied for Last"

Nina Turner, Ro Khanna and Rick Santorum debating Sen. Kamala Harris' potential presidential candidacy

by Gaius Publius

Much is being written these days about newly minted Sen. Kamala Harris, former Attorney General of California and in the eyes of many, one of the more likely candidates for president in 2020, at least so far. (See here, here and the video above.)

The questions being asked include, "How progressive is she?" and "Can she be moved more to the left than other prospective candidates"? Also, "If she gave Steve Mnuchin's OneWest Bank a pass for fraud as a prosecutor, can she be trusted at all?" The go-to piece about Harris, Mnuchin and his bank was written by David Dayen, also author of the excellent Chain of Title, a look at the mortgage fraud story in its broadest context.

Dayen has written a follow-up to his first Kamala Harris story that, in effect, says that there's nothing special about Harris in her treatment of mortgage fraud, since no one in that era, or even today, treats mortgage fraud with anything like what it deserves. His bottom line:

In other words, if you were to rank the performance of law enforcement officials during this period, everyone would be tied for last.

One of the most striking aspects of his latest piece is not his seeming defense of Kamala Harris — in fact, he's not defending her at all — but his indictment of a system of fraud-protection that's as wide and deep in scope as it is damaging in effect.

The Crime of the Century

Dayen rightly calls the 2008 mortgage crisis "the crime of the century." He writes:

Let’s recognize that no public official in this country, from Barack Obama on down, covered themselves in glory during the foreclosure crisis; to say that Harris failed to prosecute bankers is simply to say that she was a public official with authority over financial services fraud in the Obama era.

From the late Bush years through most of Obama’s presidency, at least 9.3 million American families lost their properties, whether to foreclosure or forced sale. The original sin of faulty loan originations, inflated appraisals, doctored underwriting, and improper placement into subprime loans led to fraudulent misconduct in securitization, loan servicing, loan modifications, and foreclosures, with millions of faked and forged documents used as evidence for the final indignity of eviction. There’s not a single step of the mortgage process that wasn’t suffused with illegal fraud during the housing bubble and its collapse.

The crisis resulted in a punishing recession and countless destroyed lives, not to mention what has been credibly described as an “extinction event” for the black and Latino middle class. Yet from New York to California, Arizona to Florida, Washington state to Washington, D.C., the political class and law enforcement elite responded largely with indifference. Powerful bankers with armies of lawyers were allowed to get away with the crime of the century (thus far).

The individual actors in this drama — U.S. AG Eric Holder, NY state AG Eric Schneiderman, and so many others — are none of them covered glory, but smeared with its opposite:

Though he was OneWest’s chairman, Mnuchin was never at risk of indictment or conviction. At best, California would have extracted a decent-sized fine from the company—paid for by shareholders—and guarantees meant to deter further law-breaking; it’s possible that Mnuchin, his reputation sullied, would not have ended up in charge of federal banking policy. This watered-down version of public accountability was seen as the best possible outcome, and Harris didn’t even go for that.

This doesn’t make her particularly special. Eric Holder and Lanny Breuer took hiatuses from their careers as corporate lawyers to join Obama’s Justice Department and ensure light punishment for financial abuses. Tom Miller, the attorney general of Iowa, ran the 50-state investigation of foreclosure fraud, which investigated nothing and moved directly to a weak settlement that delivered 90 percent less relief for homeowners than promised. Eric Schneiderman, New York’s attorney general, sold out supporters by agreeing to that settlement, saving it from the brink of collapse. He co-chaired a so-called “task force” on bank crimes that did nothing but ink more toothless settlements and proudly proclaim fake headline numbers about fines from behind a podium.

In other words, if you were to rank the performance of law enforcement officials during this period, everyone would be tied for last.

Read Dayen's piece to see how this heartbreaking tale is still going on. It's horrifying in its destruction of lives, and Dayen is right to highlight it.

"Not Particularly Special"

But back to Kamala Harris. It's true, as Dayen says, that within this group — where everyone is tied for last — Kamala Harris is not particularly special. But if "not particularly special" and "tied for last" is leading the field in the early race for the 2020 nomination, Democrats may be in bigger trouble than any of them realizes.

GP
 

Obama's Other Legacy: "The Greatest Disintegration of Black Wealth in Recent Memory"

(Source, and a good read on its own)

by Gaius Publius

"Nothing is sadder than a man who disclaims his power to preserve his reputation."

I've been writing a lot lately about outgoing President Barack Obama's legacy, especially on climate issues (example here). This is another piece in that series. I want to quote something from David Dayen's recent response to Ta-Nehisi Coates' widely read "My President Was Black." Coates praises Obama. Dayen adds, in short, "Yes...but."

Here's Dayen. After recounting a conversation he had with a person named Andy who was going through the hell of defending himself from foreclosure during the mortgage crisis, Dayen comments (my emphasis):

Should Andy exhaust his appeals, he’d join over 9.3 million American families who have lost their properties since the housing bubble collapsed, either to foreclosure or an associated transaction. Given the average household size in the United States, that likely represents more than 20 million people, forced to uproot their lives and find shelter. This had a particularly gruesome effect on people of color, who stored more of their wealth in home equity and were targeted for subprime loans. Coates points out that white households now hold seven times as much wealth as black households; he doesn’t mention how that statistic grew worse under President Obama, mostly because of foreclosures. Former Representative Brad Miller calls the crisis “an extinction event” for the black and Latino middle class.

I agree with Coates that “there is nothing mere about symbols,” and Obama’s meaning to black America looms large. But that achievement must contend with Obama’s culpability for the greatest disintegration of black wealth in recent memory.

If Obama ever reads this critique, I suspect he’d mutter under his breath, as he disclosed to Coates he does habitually when confronted with activist demands. “Where I got frustrated at times was the belief that the president can do anything if he just decides he wants to do it,” Obama grumbles.

Nothing is sadder than a man who disclaims his power to preserve his reputation. The presidency is subject to countless veto points and constraints, but the foreclosure disaster was unique; Congress had already given the incoming president the authority to act.

Your takeaway in three bullet points:

• Over nine million families — more than 20 million people — lost property during the mortgage crisis and had to find shelter or remain homeless.

• Obama already had congressional authority to act, and didn't. 

• As a result, Obama is culpable for the "greatest disintegration of black wealth in recent memory."

That's his legacy too. 

And for what did he do this? Dayen supplies his own answer in the quote I reprinted at the start of this piece, and I agree — "to preserve his reputation," his legacy. These simply the facts and must be acknowledged, despite the praise Obama's been lavished with lately. The homeless black man in the image above may owe his condition to the first black president.

A personal comment — Occasionally, when there's justice in the world, one is not just branded by the manicured and curated image one tries to project. One is branded instead by what one actually does in the sight of others.

Will Obama see more justice than the millions whose homelessness he caused? I guess that part of the story is still being written.

GP
  

The Elephant in the Room Is a Donkey (Reflections on Kamala Harris)

The donkey in the room (illustration by Lalo Alcaraz; source)

by Gaius Publius

Sam Seder once wisely said that during the Bush era, almost every Democrat and Democratic supporter looked like a solid progressive. It's only when Obama becomes president that you can see the difference between the Ezra Kleins of the world and the Elizabeth Warrens (my paraphrase).

But the recent Democratic primary widened those rifts — between the austerity-loving corporate enablers and the actual populists — and they may not close this time under the next Republican president. After all, in the face of real defeat — yes, I know, "she won the popular vote," but still, defeat pretty much up and down the line — the battle still rages in the Democratic Party. And it should.

What's this battle about? The same thing the primary battle was about — Will corporate-funded and corporate-loyal Democrats continue to lead the Party as they have since Clinton and the DLC took it over? Or will anti-corporate populists be in control? By "populists" I don't mean just "progressives" in that vague, feel-good sense. I mean true anti-corporatists, FDR Democrats, active and aggressive enemies of "rule by the rich."

In the primary, Sanders and the candidates he backed (and several he didn't) opposed corporate rule of the country, and were prepared to implement policies that removed Big Money's hand from the wheel of government. It's that simple. Does what people want rule government policy, or does Money stay in charge?

Their marriage to Big Money did institutional Democratic Party no favors — as a party. But it kept its pro-corporate leaders in power within the Party, which I strongly suspect was the primary goal. After all, how many of the Chuck Schumers and, yes, Nancy Pelosis of the world would ever back a person as much an enemy of their donors and the donor class as Bernie Sanders is? How many of them would prefer instead to "roll the dice with Clinton" ten times out of ten ... starting once more even tomorrow ... and risk losing electoral power once more even tomorrow ... just to maintain party power?

In other words, how many Democratic leaders now wish they had run the general election with Sanders in the lead? Not one. Just listen; you won't hear a single regret. There's no point in controlling the country, as they see it, if they don't control the party as well. Without control of the party, which of their donors would back them? With Sanders jailing Wall Street bankers, who would pay Chuck Schumer to stay in office? With Sanders in the White House, the current class of Democratic leadership would have to find new donors — actual humans perhaps, as Sanders did — or retire from public life on their previous gains and lobby for a living.

Kamala Harris, a Rising "Star in the Party"

Which brings us back to my central point. This time around, with Trump in office instead of Bush, will Seder be proven right again, or will the left-leaning public still distinguish the corporate-beholden from the populists? We're about to find out.

Democrats just elected former California Attorney General Kamala Harris to the U.S. Senate, and praise for her as a "progressive" has been voluminous.

For example, The Guardian, months before the election, wrote, "The attorney general is the odds-on favourite to become the next senator from California – and perhaps the nation’s next progressive star in the making." On her swearing-in day, the San Jose Mercury News was happy to quote Barbara Boxer saying that Harris "will continue the tradition of having a strong, progressive woman in this seat."

And the blurb for a recent CNN interview between Jake Tapper and Van Jones makes just two points: "Jones says the Democratic Party needs more progressive leaders" and "He adds that incoming Sen. Kamala Harris will be a star in the party."

It couldn't be more plain — Kamala Harris has been tapped (sorry) as one of the next progressive great ones. The Guardian even tabbed her "the 'female Obama'."

Kamala Harris, Steve Mnuchin & the California Mortgage Crisis

Thus it continued on the "praising Kamala Harris" front until recently. Then David Dayen, author of the well regarded book about fraud and the mortgage crisis Chain of Title, released this story at The Intercept:

Treasury Nominee Steve Mnuchin’s Bank Accused of “Widespread Misconduct” in Leaked Memo

OneWest Bank, which Donald Trump’s nominee for treasury secretary, Steven Mnuchin, ran from 2009 to 2015, repeatedly broke California’s foreclosure laws during that period, according to a previously undisclosed 2013 memo from top prosecutors in the state attorney general’s office.

The memo obtained by The Intercept alleges that OneWest rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.

In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.

Note that his piece is primarily about Steve Mnuchin, who, as a Trump nominee, is a safe target of progressive ire. Of course, his company, OneWest, was also caught committing what looked to investigators like "over a thousand legal violation" in just one small subsection of OneWest's loans; that ire was well deserved in any case.

So we find a piece punching a Trump nominee, and thus a safe (uncontentious) story in this anti-Trump ("resist") environment. What institutional Democrat could object?

But Dayen, true to his calling, reported the whole Mnuchin-OneWest story. Notice the name Kamala Harris above? Here's how Dayen's piece continues:

But Harris’s office, without any explanation, declined to prosecute the case.

Is this still a "safe" story for the rest of the left-leaning media to follow? More from Dayen (my emphasis):

The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.

According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.

Whether Mnuchin directed efforts to prevent scrutiny of his bank’s practices could be a focus of the confirmation hearings.

The memo also raises questions about then-California Attorney General Kamala Harris, who was sworn in as a U.S. senator on Tuesday, and who will soon have to vote on Mnuchin’s appointment.

Why did her office close the case, deciding not to “conduct a full investigation of a national bank’s misconduct and provide a public accounting of what happened,” as her own investigators had urged?

State and federal law enforcement have been severely criticized for failing to hold accountable those responsible for the financial crisis and its aftermath. The OneWest case provides another example, and this time, the failure to prosecute could help the nation’s next treasury secretary get confirmed.

To give you a sense of the full extent of OneWest's, and possible Mnuchin's, crimes, consider this:

Though the state investigators could not subpoena OneWest and were obstructed from obtaining more documents, they extrapolated that a full and unencumbered inquiry would yield at least 5,600 violations of foreclosure sale auctions, and turn up instances of backdating in nearly all of the 35,000 foreclosures OneWest had completed in California from 2009 to 2012.

That a ton of criminal activity, if true. And based on the small percentage of documents investigators were not obstructed from obtaining, they considered this estimate of the extent of OneWest's total criminal activity in California between 2009 and 2012 a fair one.

And yet, as Dayen also notes, the Kamala Harris's failure to prosecute could help Mnuchin get confirmed as the next Treasury Secretary.

Why didn't Harris prosecute OneWest? The piece offers a number of admittedly speculative explanations, which you should read. Among them, though, is this:

Harris’s prodigious fundraising also raises questions about how attentive she is to the needs of campaign contributors. Prior to signing on with Trump, Mnuchin donated to members of both parties. He gave $2,000 to Harris’ Senate campaign in February 2016. Among the investors in OneWest Bank was major Democratic donor George Soros, who maxed out to Harris’ campaign in 2015.

Oops.

The Elephant in the Room Is a Donkey

So who is Kamala Harris going to be in the Age of Trump, a "people's champion" in the Bernie Sanders mold, or someone just praised as one?

And more importantly, will that praise continue in light of Dayen's revelations? I suggest that a look at the treatment of Kamala Harris's history with OneWest and Mnuchin, especially in the lead-up to his confirmation, will provide an important and instructive test of who the mainstream Democrats and their supporting ecosystem plan to be.

Will "left"-leaning media, especially broadcast media, pick up on the Harris-Mnuchin backstory, thus calling into question her "progressive" credibility? Or will they stay silent on that part of the tale? (Looking at you, MSNBC and CNN.)

Will "left"-leaning opinion makers in the pundit-sphere fold what they learn from The Intercept's investigation into their public treatment of Harris? Or will they too stay silent, in effect confirming what Van Jones earlier proclaimed, that Harris is a rising "star" in the Party?

The elephant in the room is a donkey. What you're reading, and I'm writing, is not an piece about Kamala Harris. It's a piece about the Democratic Party and the so-called "left-leaning" media ecosystem. Observing their treatment of Kamala Harris going forward is one more way you, the reader, will know who and what the Party itself wants to be in the Age of Trump.

What is the Democratic Party and its ecosystem going to be, a "people's champion" in the Bernie Sanders mold, or something just praised as one?

If the latter, especially if Harris's failure to prosecute OneWest gets Steve Mnuchin confirmed, and they treat her as a star nonetheless (consider the consequences of that!), the Party will likely be out of power for a generation — or, as I always add, until climate chaos makes every other conversation moot.

The elephant in the room is a donkey. And out in the electorate, even if the pundits ignore it, people are watching. After all, that's how Trump got elected in the first place.

Stay tuned.

GP
 

America Cannot Recover from Recession Until It Writes Down Debt to What Can Be Paid

Wealth created by productivity diverged from wage growth in the Carter administration, but separated for good under Reagan and all subsequent presidents. Wages have been essentially flat since 1972. For almost all working people, increase in purchasing power has been achieved by increasing personal debt.

by Gaius Publius

We live in a predatory capitalist world, one in which those with money compete ruthlessly with each other to acquire the most added money they can. Achieving this goal includes, among other things, impoverishing their customers, converting the personal wealth of their customers to personal debt, then making more money selling and collecting interest on that debt.

After 45 years of this behavior, and especially in the wake of the devasting 2007-2008 crash, most Americans live with a burden of debt they can never recover from, can never earn their way out of. Since 2008 especially, as a direct consequence of this situation, debt growth has continued to skyrocket while GDP growth has limped along.

This started in the 1980s, in which almost all of the fruits of increased productivity were harvested by the owning class and not the workers who generated it. You can see that process in the chart above.

This is a very perverse economy, but it's unfortunately the one we're trapped in. During a crisis, major bond holders in particular and creditors in general are protected and reimbursed at 100 cents on each dollar owed — bond holders via various bailouts, and creditors via increasingly harsh and punitive bankruptcy laws that apply to those who owe them money. Thanks to a relatively recent change, for example, promoted by Joe Biden and others, student debt, now totally over $1 trillion dollars, is almost impossible to discharge by declaring bankruptcy.

Total U.S. student debt as of March 2015 (source). Note that student debt growth was unaffected by the 2007–2008 economic crash.

Keep in mind, this discussion is entirely about personal debt, debt held by citizens, like mortgage debt, credit card debt, student debt, car loans, and the like.

Bottom line: No U.S. economic recovery is possible until the government stops protecting creditors at all costs and starts making it possible (or mandatory) for personal debt to be forgiven. During the last crisis, for example, Obama's government could have bailed out the mortgage holders themselves, regular citizens, but chose instead to bail out banks and institutional creditors that held those mortgages, leaving mortgage debt held by individuals almost entirely in place (and largely unrepayable).

In fact, the insurance company AIG was given federal money to pay its derivatives debt to major banks at 100 cents on the dollar, specifically so that AIG creditors like Goldman Sachs would not see or suffer any loss at all. In other words, Obama's government bailed out AIG as a backdoor bailout of Goldman Sachs and other banks.

Not so the suffering mortgage holders, whose personal pain was infinitely greater. They saw, and still see, next to nothing in relief.

You may call this recommendation, that debt be forgiven, morally problematical — after all, "everyone knows" you have to pay your debts — even while U.S. corporations and the elites who run them declare bankruptcy all the time as "simple business decisions," and the bailout of Wall Street was by definition debt forgiveness with government money.

Nevertheless, if the current overhang of personal debt isn't erased — wiped off the books — there will never be an economic recovery in the U.S., at least not for the lower 90% of the population unserved by either political party. And if people in the lower 90% never see a recovery, the national economy will never see one either. There's just no such thing as a recovery in which only the rich are spending.

Michael Hudson: "We're in a Permanent Debt Deflation"

Here to explain all this much better than I can do is economist and professor Michael Hudson, a man who understands the relationship between debt and the economy as well or better than anyone like him writing today (h/t Naked Capitalism).

This is an excellent and clear explanation, and a fascinating listen. Please give it an opportunity to engage you. If you do, there are several surprises near that end you're likely to enjoy.

It doesn't matter who is in office, or which party. The economic condition of the lower 90% will not change — will in fact worsen until there is a revolution of some kind — unless the mountain of U.S. personal debt is forced to be forgiven.

It's just a fact. Please consider that fact during the next economic crisis, with its inevitable calls for new banking and creditor bailouts. Or during the next eruption of revolt against our governing elites.

You may also want to hope that the next eruption of revolt is expressed electorally like the last one was, and not expressed in some other way. Desperate people who can't find electoral relief often seek relief through non-electoral means. Not a recommendation from me, or something I wish for, but a fact I often fear these days.

GP
 

Barney Frank Drops A Financial Crisis Bombshell; The Press Responds With Silence

by Gaius Publius

I can't take credit for this, though I wish I could. David Dayen, who writes at Salon, has been reading Barney Frank's new book Frank and also its reviews. Dayen is one of the most knowledgeable writers on the mortgage and financial crises — both. (Note to readers: It's not a financial crisis if there's no mortgage crisis. It's the inability to pay mortgage debt that started the avalanche of derivative-caused banking losses.)

Dayen noticed that in his book Frank makes a startling revelation, but since it involves (a) mortgage borrowers, not bankers, and (b) the current Democratic president, it has gotten zero coverage. What's the revelation? Barack Obama could have singlehandedly made sure TARP money, as mandated by Congress, was made available for mortgage relief, and chose not to.

For doomed mortgage-holders, as opposed to protected and bailed-out bankers, that makes Obama the perp. How do we know? Barney Frank said so in print. Here's Dayen's catch (my emphasis):

Barney Frank drops a bombshell: How a shocking anecdote explains the financial crisis

Barney Frank has a new autobiography out. He’s long been one of the nation’s most quotable politicians. And Washington lives in perpetual longing for intra-party conflict.

So why has a critical revelation from Frank’s book, one that implicates the most powerful Democrat in the nation, been entirely expunged from the record? The media has thus far focused on Frank’s wrestling with being a closeted gay congressman, or his comment that Joe Biden “can’t keep his mouth shut or his hands to himself.” But nobody has focused on Frank’s allegation that Barack Obama refused to extract foreclosure relief from the nation’s largest banks, as a condition for their receipt of hundreds of billions of dollars in bailout money.

The anecdote comes on page 295 of “Frank,” a title that the former chair of the House Financial Services Committee holds true to throughout the book. The TARP legislation included specific instructions to use a section of the funds to prevent foreclosures. Without that language, TARP would not have passed; Democratic lawmakers who helped defeat TARP on its first vote cited the foreclosure mitigation piece as key to their eventual reconsideration.

TARP was doled out in two tranches [slices; bundles] of $350 billion each. The Bush administration, still in charge during TARP’s passage in October 2008, used none of the first tranche on mortgage relief, nor did Treasury Secretary Henry Paulson use any leverage over firms receiving the money to persuade them to lower mortgage balances and prevent foreclosures. Frank made his anger clear over this ignoring of Congress’ intentions at a hearing with Paulson that November. Paulson argued in his defense, “the imminent threat of financial collapse required him to focus single-mindedly on the immediate survival of financial institutions, no matter how worthy other goals were.”

But Frank kept pushing: 

With the first tranche of TARP funds running out by the end of the year, Frank writes, “Paulson agreed to include homeowner relief in his upcoming request for a second tranche of TARP funding. But there was one condition: He would only do it if the President-elect asked him to.”

The "President-elect" was Barack Obama, and he said no, we're just going to bail out the banks, which is told by Frank via this classic Frank-ism:

Frank goes on to explain that Obama rejected the request, saying “we have only one president at a time.” Frank writes, “my frustrated response was that he had overstated the number of presidents currently on duty,” which equally angered both the outgoing and incoming officeholders.

Dayen goes on to document just how often the President-elect violated that "one president at a time" principle before taking office. He also notes that there was a second round of negotiation with Congress about releasing the second tranche, in which promises were made by the President-elect and broken. Seems the man was determined not to bail out the "wrong people" — an opinion widely held among elite opinion makers and leaders.

Remember, this is Barack Obama vintage 2008. Certainly post-campaign — he'd already won — but pre–taking office, with all the rolling betrayals that entailed. Only those watching his FISA vote, perhaps, knew what was coming.

Dayen couches this unfortunate event in humanitarian concerns, as he should, but also in economic terms. By not bailing out the nation's purchasers, the public, Obama extended the crisis:

That’s the main reason why the significance of Obama’s decision cannot be overstated. The fact that we waited six years to get some semblance of a decent economic recovery traces back directly to the failure to alleviate the foreclosure crisis. Here was a moment, right near the beginning, when both public money and leverage could have been employed to stop foreclosures. Instead of demanding homeowner help when financial institutions relied on massive government support, the Administration passed, instead prioritizing nursing banks back to health and then asking them to give homeowners a break, which the banks predictably declined.

But again, we're back to elite opinion, which holds that even though the way out of a crisis like this is to stimulate buying and demand, that option is off the table. Because, whether people will say it or not, in our post-Reagan job-creator world, only the wealthy deserve to be made whole by the government. That's not snark; it's one of the guiding principles of our government.

Dayen makes a great catch, and his Salon piece is a very good read, including his baseball-metaphor conclusion. My point is a little different than his, however. Our need to service the "free" market  wealthy, obvious in this anecdote, will kill us, literally. But that's a climate story for another day.

He drank the milkshake of the mortgaged.
Did Obama hold the straw?

Do stay tuned though; the "free" market wealthy are draining most of California's water, drinking that milkshake as well, and there's a war brewing. More on that shortly.

GP

Right-wingers always want to leave important business to the states -- secure in the knowledge that it'll never get done

Shouldn't those state-level misappropriators of bankster mortage blood money be facing prosecution (and ideally execution)?

by Ken

Take most any issue of national importance to ordinary Americans, and the standard right-wing meme is: "It's best left to the states. Health care, for example. Yessiree, leaving those insurance exchanges to the states is going to result in really bang-up implementation of the pathetically modest "reforms" of the health care "reform" package. Notice how all the states you knew were going to drag their feet and/or screw it up to start with are banking on the Supreme Court to get them off the hook.

Of course one might ask, in how many of those states are backup plans being developed to improve health care delivery and control health care costs in the event that the Court strikes down all or part of the "reform" package? I don't have the exact number in front of me, but I would guess that it's in the vicinity of zero. A crisis in the delivery of affordable and effective health care? Never heard of it.

Leave it to the states, right! The perfect formula for not getting something done.

I read this report from The American Propect's Balance Sheet and was nauseated. Not surprised, mind you, just nauseated.

STATES GO ROGUE WITH
FORECLOSURE SETTLEMENT CASH

Big banks gave the states $2.5 billion to help homeowners facing foreclosure, but only 27 states plan to use the money toward that end. At least 15 other states have already funneled the money into work as a stopgap in their ailing budgets. Texas' $125 million was deposited right into its general fund, Missouri is trying to prevent major cuts to higher education, Arizona is using half of its money for prisons, and Virginia is giving its $67 million to local governments.

Homeowners are left to fend for themselves. "If you leave homeowners hanging out there to dry, then in the short term maybe you help to meet the budget gap this year,” said Maeve Elise Brown, executive director of Housing and Economic Rights Advocates, to The New York Times. “But in the long term the more people we have going through foreclosure, the worse it’s going to be for our economy as a whole.”

I suppose it's possible to have deep-rooted ideological objections to helping victims of the housing bubble and the economic meltdown stay in their homes. In which case, I guess, when you're offered some of that modest bankster blood money, you just say, "No, thanks, we're happy to see those people booted out of their homes. It's the American way."

You can do that. It would be nice to know whether your state's troubled mortgage holders agree, but still, I guess you can do that. What you can't do is misappropriate the money for other uses, like to try to plug the gaps left by the right-wing ideological sociopaths' war on government. That's stealing, and the offenders should be prosecuted and, ideally, executed. (What's the point of having a death penalty if you don't use it on people like this?)

#

The Aristocracy Of Obscene Wealth

Sunday morning, Digby was riffing on the place of aristocracy in this nation founded as a democratic experiment-- and she was looking straight at the Romneys who had managed, through a little-used loophole for the extraordinarily wealthy, to leave $100 million tax-free to their brood of sons.

Aristocracy is inherent to conservatism. For all the talk about individual freedom and liberty, what matters most to conservatives is property and inheritance:

People who believe that the aristocracy rightfully dominates society because of its intrinsic superiority are conservatives; democrats, by contrast, believe that they are of equal social worth. Conservatism is the antithesis of democracy. This has been true for thousands of years.

The defenders of aristocracy represent aristocracy as a natural phenomenon, but in reality it is the most artificial thing on earth. Although one of the goals of every aristocracy is to make its preferred social order seem permanent and timeless, in reality conservatism must be reinvented in every generation. This is true for many reasons, including internal conflicts among the aristocrats; institutional shifts due to climate, markets, or warfare; and ideological gains and losses in the perpetual struggle against democracy.

In some societies the aristocracy is rigid, closed, and stratified, while in others it is more of an aspiration among various fluid and factionalized groups. The situation in the United States right now is toward the latter end of the spectrum. A main goal in life of all aristocrats, however, is to pass on their positions of privilege to their children...

Mitt is an aristocrat. And he's making sure that his children are aristocrats too. And, like all aristocrats, they believe their aristocratic privilege is a result of natural superiority. As Steve Forbes says above, they believe it's exactly the same as being born with talent or intelligence. It's God-given.

God-given or government-given? If you think government policies don't entrench the wealthy, you are completely deluded. And an OpEd in yesterday's NY Times, More Help For the Wealthy, goes right to the point. It's just another version of Paul Ryan's class war that the GOP is desperately trying to codify before they're kicked out of office. The point the Times' editors were making is how "the Republicans’ latest effort to tilt the tax code in favor of the wealthy, and starve the government of needed revenue, is particularly cynical" this year. Their so-called "Small Business Tax Cut Act" sounds safely mom-and-pop but is "designed so that nearly half of the tax cut would go to people with annual income over $1 million, and more than four-fifths would go to those making over $200,000."

The bill’s proponents, led by Majority Leader Eric Cantor, say that lower taxes would lead to more hiring. But the economic reality is that employers, big and small, are hesitant to hire because of slow or uncertain demand for their products and services, not because of their tax burden. And companies would receive the tax cut even if they did not hire new workers-- making it a windfall, not an incentive.

The bill is predicated on an overly broad definition of “small business”-- one with fewer than 500 employees, which can include multimillion-dollar partnerships and corporations. It is also based on a willful denial of the reality that small businesses are not the big job creators politicians often say they are.

If “small” were set at 50 employees, small businesses would be credited with creating less than a third of the new jobs over the last 20 years. And many such jobs are soon lost as small businesses struggle or fail. The best way to encourage their success is with continued government spending to support demand and by building a well-regulated banking system that is not prone to the busts that devastate small businesses.

As for the broader economy, the Congressional Budget Office analyzed 13 policies last year for their potential impact on economic growth and job creation in 2012 and 2013. The option of a business tax cut along the lines of the Cantor bill ranked next to last in bang for the buck. More effective options include fiscal aid to states and increased safety net spending, which create jobs by bolstering consumer demand-- and which Republicans fiercely oppose.

Perhaps you watched Obama advisor David Plouffe on Political Capital over the weekend. He made the point that the Romney's ought to release their tax returns over he past 2 decades or so-- the ones he showed McCain when he was begging to be on the doomed 2008 ticket... only to have McCain go over them and quickly choose Sarah Palin instead of him.

[T]he American people want more fairness in the tax code, they want to make sure that, to grow the economy and reduce the deficit, we have a balanced approach. The president’s committed to making sure that people who are making, you know, $20 million, $50 million, $100 million, aren’t paying less effective tax rate than the middle class.

You can trust this president to fight for a fairer tax system. And the question is, is anything going to change if Governor Romney is elected president? And I think the answer is unqualifiedly no.

...You know, the stumbling block to solving this last year was too many Republicans here in Washington were unwilling to ask the wealthy to do anything at all. And so there’s a big difference here. And so this is an important principle. Whether it’s later this year, next year, at some point, the country’s going to have to muscle up here and solve our long-term fiscal challenges and do the smart things to help grow the economy. You’re not going to do that unless you’re willing to ask the very wealthy to do a little bit more in revenue.

...[W]e went through the worst recession this country’s ever had, except for the Great Depression. And there were reasons for it. There were policies in place. So those are the same policies that Romney wants to bring back and that the Republican Congress wants to bring back.

So the middle class has been through a lot here. This is a president - whether it’s our tax policy, investments in things like education, investments in things like student loans, trying to rebuild this country so that our construction industry gets back to work, this president--that’s how he views the economy.

The president views the economy through the lens of middle-class families, people that are trying to get into the middle class. And that’s going to be the central challenge, not just-- not of this election. This is the central challenge facing the country, because eventually we’re going to recover fully from the recession, but are we going to have the economy that works for the middle class?

...You’ve got a few dozen people who are going to write $5 million, $10 million, $15 million, $50 million checks to try and purchase the White House on behalf of Governor Romney. That is a terrible, and that’s why we opposed the Citizens United decision.

But the real problem for the obscenely wealthy isn't really Obama and the conservative Democratic establishment with their basically moderate Republican agenda. The only serious problem for those folks are what deranged neo-fascist Allen West referred to as "the communists," the Progressives. Tinkering around the edges, Obama-style, is no threat to the dominance of the aristocracy. The kind of sweeping changes the Congressional Progressive Caucus would like to make, that's the kind of thing billionaires and even quarter billionaires could lose sleep over. Take, for example, the whole idea of mortgage principle write-downs. CPC co-chairs Raúl Grijalva and Keith Ellison have renewed their calls for DeMarco, the Acting Director of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, to write down mortgage principal amounts for homeowners, nearly 28% of whom are currently underwater.

"Decreasing the amount owed allows struggling families to stay in their homes and will begin to stabilize the overall housing market. Earlier this year we joined hard-working families and a strong group of CPC Members on the steps of the U.S. Capitol to call on Mr. DeMarco to reduce foreclosures, protect investors and communities and permit mortgages to be written down.
 
“Underwater homeowners need relief. Too many of them were victims of predatory loans or fraudulent practices that did not fully disclose the cost of their mortgage. Write-downs will help many of the 3.3 million mortgage holders whose loans are guaranteed by Fannie Mae and Freddie Mac and are currently underwater to preserve their homes. Simple, straightforward principal reductions are a good way to prevent the foreclosure crisis from dragging down the U.S. recovery. The CPC will be holding a hearing to examine this issue further.”

Blue America never raised a dime for Obama-- and never would. People may decide to vote for him as the lesser-- even far lesser-- of two evils. But Blue America is not about lesser of evils; it's about helping elect far better than what we've had, men and women like Norman Solomon, David Gill, Franke Wilmer, Alan Grayson and this week's newest Blue America endorsee, Trevor Thomas. The people on this page are not garden variety DC Democrats. This is the best there is running for Congress, the people who will move the ball forward. The alternative, when the white gloves come off, is this:

The Mortgage Crisis Was And Is A Predictable Result Of Corrupt Conservative Policy Inside The Beltway

Politics is so much easier when there are guys with white hats and guys with black hats-- or guys with red t-shirts and guys with blue t-shirts. The real world is more complex. Generally speaking, the Democrats are the good guys and the Republicans are the bad guys. But that model is woefully inadequate for making a series of rational judgments about who to support with cash, who to volunteer for, who to vote for, or even who just to root for. Issues like the DC Conservative Consensus come into play, as does the whole corruption thing. Recall how Jack Abramoff-- briber extraordinaire, and if he doesn't know, who does?-- defined bribery in his post-prison book Capitol Punishment:

[C]ontributions from parties with an interest in legislation are really nothing but bribes. Sure, it's legal for the most part. Sure, everyone in Washington does it. Sure it's the way the system works. It's one of Washington's dirty little secrets-- but it's bribery just the same...

Conservative values extol greed, selfishness and corruption as a positive good and conservative politicians can fall back on an Ayn Rand philosophical justification for ripping off the public and for every kind of corruption imaginable. Republicans routinely do. What about conservative Democrats? Only the most naive partisan would believe that Democrats in DC are any less corrupt the Republicans. The entire raison d'être for the Blue Dogs coalition and for the New Dems, for example, is corruption. Go back to Abramoff's definition above. Both conservative Democratic alliances exist to offer support for corporate agendas in return for cash payments. There are no Blue Dogs and-- I'm sorry to say-- almost no members of the New Dems who are not corrupt. Nor are there more than the tiniest handful of Republicans who are not corrupt. It's bipartisanship at it's Beltway apex. And, among other things, it led directly to the mortgage meltdown and the current economic crisis.

Let me turn to Joshua Holland and his brilliant book, The Fifteen Biggest Lies About The Economy for a moment to reiterate one of the biggest lies of all, namely that the housing crisis was caused by poor people and that the big Wall Street banks were victims. We started the discussion last week but Holland went on from there:

In 2010, former Fed chairman [and deranged Ayn Rand acolyte] Alan Greenspan offered a bit of historical revisionism to a House committee investigating the causes of the financial crisis, telling lawmakers, “In 2002, I expressed concern... that our extraordinary housing boom, financed by very large increases in mortgage debt, cannot continue indefinitely... I warned of the consequences of this situation in testimony before the Senate Banking Committee in 2004.”

Writing in the Washington Post, Dana Milbank offered a corrective with some of the highlights of Greenspan’s congressional testimony at the peak of the housing bubble. In 2005, Greenspan told lawmakers, “A bubble in home prices for the nation as a whole does not appear likely.” He added, “Home price declines... were they to occur, likely would not have substantial macroeconomic implications,” and explained that “nationwide banking and widespread securitization of mortgages make it less likely that financial intermediation would be impaired.”

In English, that last bit meant “Banks won’t get into serious trouble even if things do go to hell,” and we know how well that prediction turned out. If Greenspan could be so wrong and the smart people at the Washington Post and the New York Times couldn’t see this huge, dangerously inflated housing bubble, how was your average couple trying to get a place to live or the small investor looking for a few bucks in rental income supposed to make a rational decision about how much debt to take on? That’s not a defense of individuals who got in over their heads; it’s simply an important bit of context.

The narrative that the real estate crash and the subsequent recession were the fault of borrowers, especially poor and middle-income borrowers-- while members of the financial community were innocent victims-- is not only revisionism of the worst kind, but it’s an especially egregious lie.

The obvious sin of this claim is that it shifts responsibility for the mess away from those who created it, but what makes it even more disgraceful is that conservatives have long argued that efforts to increase home ownership among low-income families and communities of color was the “free market” thing to do (and have, to some degree, negated the need for a decent social safety net). It was George W. Bush, not Vladimir Lenin, who said in a 2002 speech, “We have a problem here in America... a homeownership gap,” and said, “we’ve got to work together to close [the gap] for the good of our country.” This was standard American Enterprise Institute–quality conservative fare.

Blaming individuals is easy, though-- it’s not hard to understand how people could borrow a bunch of cash they were later unable to pay back. The real cause of the housing crash is, of course, a far more complicated tale. Yet it’s a story that ultimately represents the abject failure of conservative economic mythology, so it’s important to understand.

The bottom line: lenders used ludicrously lax standards to write loans to just about anybody, and people certainly got in over their heads. Yet as business reporter Andrew Leonard wrote, beginning in the 1990s, “The incentive for everyone to behave this way came from Wall Street-- where the demand for (debt-backed securities) simply couldn’t be satisfied. Wall Street was begging the mortgage industry to reach out to the riskiest borrowers it could find, because it thought it had figured out a way to make any level of risk palatable.” He added, “Wall Street traders, hungry for more risk, fixed the real economy to deliver more risk, by essentially bribing the mortgage originators and ratings agencies to... make bad loans on purpose. That supplied (Wall Street) speculators the raw material they needed for their bets, but as a consequence threw the integrity of the whole housing sector into question.”

Although the U.S. housing market is worth somewhere in the neighborhood of $10 trillion, it was Wall Street’s wheeler-dealers-- with lobbyists and congressional allies keeping regulators out of their business-- who built a house of cards out of “exotic” mortgage-backed products and other “derivatives” worth as much as sixty times that figure. It was paper wealth backed by little more than the irrational belief that what goes up will never come down. These instruments, which Warren Buffet called “the real Weapons of Mass Destruction,” were estimated to be “worth” roughly twelve times the output of the entire global economy.

This is how a drop in the U.S. housing market could precipitate such widespread economic pain worldwide. It wasn’t silly borrowers who were to blame-- if not for the huge overhang of “toxic” securities Wall Street had created, even a ridiculously high rate of default in this country’s subprime mortgage market wouldn’t have stunned the entire global economy.

Now, in light of the above, I want to steer you towards Mike Lux's assertion that the hubbub over the settlement talks with the Big Banks seems to have settled own and the reporters have gone home, but that the banksters and their corrupt political handmaidens are not only far from vanquished, but ready to wreak havoc on society all over again. "Unpunished" is certainly interpreted as permission to rob and steal again... with impunity.

Let’s start with talking about why so many activists and organizations like the Campaign for a Fair Settlement and the New Bottom Line pushed so hard for a more aggressive investigation in the first place. No matter how those first settlement talks with the banks turned out, it was always clear that whatever the number government negotiators got would be tiny compared to the scope of the $700 billion dollar underwater mortgage problem homeowners and our entire economy is faced with. And we were right: the $25 billion is a drop in the bucket, about 3 percent of the way to a solution. The far bigger question is what would happen next, because our national economy will continue to be weighed down heavily by this deeply damaged housing market unless there are much deeper mortgage write-downs.

There are two big ways for more mortgage write-downs to happen, and two big goals progressives should have for the financial fraud task force. The former pair first: most mortgages are owned by either Fannie and Freddie, or by the big bank conglomerates on Wall Street. The first way for massive mortgage write-downs to happen is either for Fannie and Freddie acting administrator Ed DeMarco to change his policies on write-downs, or for him to be replaced by Obama making a recess appointment of someone who would change the policies. That’s why many groups have launched a Fire DeMarco campaign, and many others keep banging on his door to ask him to change direction. There is some dissent on this among people who know the banking issue, because some banks own second liens on these mortgages and could benefit as a result. It’s a fair point, and anything that can be done to structure Fannie and Freddie write-downs in a way to not help the big banks is important to do. But my view is that maximizing the write-downs is critical, that homeowners and the overall economy need these write-downs too badly to spend an inordinate time worrying that some banks may benefit as a result. (Wall Street bankers find many different ways to hedge their bets and diversify their holdings, meaning they sometimes find ways to profit even on things that are actually good for people. Go figure.)

The other way for big write-downs to happen is if the financial fraud task force can squeeze the big banks on all the fraud they have committed, and get them to agree to writing down a much bigger pot of money-- in the hundreds of billions, not the tens-- in exchange for a legal release on some fraud claims (although definitely not all) by the government. Which leads to my next major point: that of goals for this fraud task force.

The two goals for the task force as far as the progressives I am talking to are these: write-down money and prosecution for crimes committed. Some people think these are mutually exclusive. I don’t, and neither should task force members. Based on what we already know from news reports and other legal action, it is clear that if the task force is aggressive and tough enough in their negotiations, they can through subpoenas and depositions find thousands of separate violations of punishable financial fraud. Much of that can be used to force the bankers to the table for real negotiations about hundreds of billions of dollars in mortgage write-downs, but investigators will also find plenty of fraud so egregious that the high rollers in these firms ought to be going to jail as well. Indicting, perp walking, and sending some of these top execs to prison is important, because if wealthy and powerful people can continually violate the law with impunity, they will in fact keep doing just that, and our financial system will be permanently at risk.

The question now is whether the task force will be effective in bringing bankers to justice, and in forcing bigger write-downs. But this is a real question, and I think it is important for the American people to understand what is going on in there. To all of us on the outside who have been working on these issues, things don’t seem to be moving very fast. We need to know the answers to some very important questions, including:

-Is there an executive director, coordinator, or clear manager of any kind in place to drive this process forward aggressively? There was discussion for a while of Rep. Brad Miller (D-N.C.), a great consumer advocate, playing such a role, but that talk seems to have died out and I am still not clear how they are managing this in the meantime.

-Will any more staff resources beyond the very modest numbers announced when the task force was unveiled be appointed?

-Of the staff resources that were appointed, are all of them actually assigned and working? If not, how many are actually doing any work? If not, why (the hell) not?

-Are task force leaders keeping a close eye on statute of limitation issues to make sure we can actually prosecute the most important cases of bank fraud that exist out there?

-After the first flurry of subpoenas, we haven’t to my knowledge seen any more come down. Why not? Seems like there is plenty to investigate, why the hold-up on more subpoenas?

-At least some of the members of the task force have said they want to be aggressive and fast moving in this investigation. Are there people putting road blocks up? If so, why aren’t they being cleared away? Who has point responsibility for clearing the road blocks out of the way?

Here’s the most important question in my mind: is the White House paying enough attention to this? I know from my experience in the Clinton White House that once a decision is made to move forward on a major new initiative like the settlement and fraud task force, that sometimes the sense of urgency fades and senior staff tend to move on to new issues, problems, and crises-- they assume whoever they appointed to do things is taking care of it. That is natural enough given all the demands on the White House, and I sense it may have happened here. But I fear for my friends in the Obama White House that this is going to come back and bite them in the ass in a really serious way if they aren’t paying a lot of attention to it. One of the greatest weaknesses the President has going into election season, both with swing and base voters, is the lingering feeling that he and his team have been too soft on the Wall Street guys that took down this economy. The big banks making record profits and handing out record bonuses the year after taxpayers bailed them out, and while the overall economy has been terrible, has left a lasting impression with voters. The failures of the HAMP program, the flurry of bad press around the Suskind book, the unwillingness to recess appoint Elizabeth Warren as the head of Consumer Financial Protection Bureau (even though the person Obama appointed, Rich Cordray, has been terrific, he has nowhere near the profile or cachet with activists following the issue as Warren), and the lack of any prosecution of Wall Street big shots has steadily added to that image. So if nothing happens with this task force any time soon, it will be a huge disappointment and a very big deal to people and organizations working on the issue, to the reporters who know the financial beat, and to voters in general. In an election season dominated by discussion of Mitt Romney’s Wall Street background, for the President to be vulnerable on this issue would be a terrible mistake, and the way they get strong on it is to have a successful task force.

Here’s the electoral component of this that almost no one is thinking about: there are 11,000,000 underwater homeowners right now, many of them families with multiple voters living there. There are a ton of them in key swing states like Nevada, Florida, Ohio, Pennsylvania, North Carolina, Wisconsin, and Colorado. In my mind, they are very likely to be swing voters: screwed over by Wall Street, but not feeling like either party is helping them much. They have heard about the settlement, but $25 million doesn’t go very far when there’s $700 million in negative equity, so they aren’t likely to get much help, which will make them even more irritable-- it could be HAMP all over again in terms of promises of help made but not delivered. Holding the banks accountable, and delivering a big new round of write-downs, is going to look awfully good to those voters and their neighbors who don’t want more foreclosed homes on the block.

My advice to my friends at the White House is to pay a lot of attention to this sooner rather than later, and to light a fire under anyone involved in the task force who may be throwing those road blocks up.
 
The task force needs to show some visible progress, some real movement that is obvious to people, sooner rather than later on this. If they move aggressively forward, I believe based on conversations with legal experts that it is entirely possible the banks can be forced to write down $200-300 billion in mortgages before the end of the year. That would not only help those underwater homeowners but would be a dramatic boost to the entire rest of the economy because of the extra cash it would put in homeowners’ pockets and the major boost it would be to the overall housing market. The big banks can certainly afford it: according to an SEIU report, in 2010 alone just the six biggest banks gave out an estimated $143 billion in bonuses. Given that these write-downs would be cumulative over many years, $200-300 billion might mean smaller bonus checks and profit margins, but it is nothing that would break the bank. And here’s the other thing: if you write down these mortgages and stabilize the housing market, all those toxic assets the big banks hold will start to look healthier soon, so the banks would even get some of that money back.

This issue has faded from the headlines, but it is a huge deal-- for the homeowners who remain stuck underwater, for the housing market and economy as a whole, and for the President’s re-election chances. Let’s hope these questions get answered soon, and in a good way. And let’s hope the task force can get its act together to force another big settlement, and some perp walks as well, before it is through.

And Inside-the-Beltway, the Sword of Damocles hanging over all of this is the glaring fact that the Financial Industry has pretty much bought Congress. Not counting the $4,859,192,569 they've spent on lobbying in the same period, this is what has been spent on direct bribes to federal elected officials since 1989-- more than any other industry or sector:


And this year, the bribery is keeping up smartly. So far in this cycle the Finance Industry has spent in the neighborhood of $200 million, almost all of it to corrupt conservatives, overwhelmingly Republicans, of course, but plenty of table scraps to buy enough Democrats off as well. This cycle only-- so not career-long, just for this election cycle-- the 5 most egregious bribe-takers from the Financial Sector are:

John Boehner, Speaker of the House- $2,048,550
Eric Cantor, Republican Majority Leader- $1,083,050
Spencer Bachus, Republican chairman of the House Financial Services Committee- $841,725
Jeb Hensarling, Wall St. shill on the House Financial Services Committee- $652,347
Ed Royce, Wall St. shill on the House Financial Services Committee- $621,360

Who ever heard of Ed Royce (R-CA)? Why do the banksters give him so much money? He's a very senior Republican who sits on both the Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises and the Subcommittee on Financial Institutions and Consumer Credit. He basically represents the big Wall Street banksters on both subcommittees and has never-- not once-- voted the interests of working families in his district. He always-- 100% of the time-- votes and advocates for the special interests of the Wall Street predators, who, as we see, continue to reward him handsomely. (The banksters and insurance crooks have given Royce $4,025,461 since Orange County first elected him in 1992.)

The same goes for another barely known corrupt conservative, Jeb Hensarling of Texas. He's the vice chair under Bachus of the Financial Services Honeypot Committee and sits on the subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises and the subcommittee on Financial Institutions and Consumer Credit, where he also advocates for the Big Banks and against the working families back in the suburbs east of Dallas. He's worked hard for the bribes-- $3,754,778-- the Big Banks and insurance crooks have lavished on him since 2002.

Hensarling hasn't had a serious challenge for reelection ever and isn't expected to have one this November either. Royce, on the other hand, may have his first serious battle for reelection ever. The newly redrawn 39th CD has a non-white majority (33% Hispanic and 29% Asian) and Royce is being challenged by a Harvard-educated very popular neighborhood boy, Jay Chen, who's fluent in Spanish and who we'll be talking to here at DWT very soon.