The Non-Mandated Society: Why Obama's Mortgage Programs Fail

by Janet Ritz

To expect banks to care about Americans over their global shareholders is asking banks to become 'persons' rather than corporate persons. When programs come from Washington as guidelines rather than mandated, banks use them to maximize profits at the expense of those the programs are meant to help.

That would seem a harsh statement until one takes into account disturbing reports that support such a conclusion. It became more evident recently with a multi-billion program the Obama Administration sent to states hardest hit by the recession to provide emergency mortgage loans to the unemployed. It was not altruism. This was initiated to save the tax base in middle class neighborhoods -- an essential ingredient to economic recovery. The program had been anticipated by struggling homeowners who'd waited a year for their states to initiate the program that would give them loans to cover their mortgage payments for up to two years.

President Obama established the Hardest Hit Fund in February 2010 to provide targeted aid to families in states hit hard by the economic and housing market downturn. Each state housing agency gathered public input to implement programs designed to meet the distinct challenges struggling homeowners in their state are facing. States were chosen either because they are struggling with unemployment rates at or above the national average or steep home price declines greater than 20 percent since the housing market downturn.

While investigating the program's implementation in California, I came across what may be the primary reason that the Obama Administration mortgage programs out of their Treasury Department have such an abysmal track record of achieving their stated goals.  Continued...

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Obama's Tax Deal: Leaving out the 99ers is a 2012 Mistake

by Janet Ritz

Unemployed or know someone out of work? Relieved the president's tax deal will provide thirteen months of continued unemployment benefits? Sorry to burst your bubble, but not all the unemployed promised a thirteen month authorization of benefits in exchange for the Bush tax cuts will receive those benefits for thirteen months.

The thirteen months is an authorization to fund existing tiers, not an extension beyond those tiers. The eligible unemployed will receive checks only until they exhaust their claims. Those already on the final tiers will see their unemployment benefits end in early 2011. They will join the 99ers -- those whose claims have ended -- in an escalating downward spiral of the middle class that will culminate in a burst of anger at the president when these disenfranchised new 99ers find themselves without a safety net or enough jobs to account for their numbers throughout 2011 -- while the uber-wealthy collect their exponential winnings from the tax cuts right on through 2012. Continued...

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'Too Big to Fail' Fallout on Capitol Hill

by Janet Ritz

Rep. Brad Sherman (D-CA) intends to introduce an amendment to the proposed House Financial Services Committee "Too Big to Fail" bill that will require large banks to fund their own insurance against failure. This came after smaller banks and economists raised concerns that the requirements for the smaller banks to pay into the fund would also require those smaller banks to carry the financial burden for the larger banks should they fail -- larger banks that would be helped through crises because they were too big to fail whereas the smaller banks would be left to fail under similar circumstances.

Rep. Brad Sherman (D-Calif.) will introduce an amendment to a bill in the House Financial Services Committee to raise the existing threshold to either $50 billion or $75 billion, he told Huffington Post on Wednesday night. Those thresholds could rise in the future should he make them inflation-adjusted, he said.

Policies and proposed legislation involving banks considered too big to fail have also seen bipartisan criticism which has led to the introduction of legislation to provide more transparency into the lending activities by the Federal Reserve:

House pushes for sweeping audit of the Fed

Bipartisan effort aims to get peek into secretive U.S. central bank

WASHINGTON - House lawmakers want to pry open the books of the famously secretive Federal Reserve with legislation that would subject the U.S. central bank to a sweeping congressional audit.

The effort is overwhelmingly bipartisan. Hardline conservatives and liberal Democrats have banded together in their criticism of the Federal Reserve as a major power broker in the financial system that does not answer to Congress.

Continued...

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