Sunday, March 01, 2009

The Good Obama

Obama's speech to Congress last week got high political grades and lower economic ones. Even Ronald Reagan's Treasury secretary is worried about zombie banks, created by an aversion to even temporary nationalizaton that would consist of "a piecemeal pumping of more public money into insolvent banks in the vague hope that things will improve down the road," which "could truly be historic folly." My capitalist pals make some good points about the weaknesses of his plan. And everyone seems worried about whether the current Treasury secretary Tim Geithner is right for the job.

It turns out that all those mortgage notes that were transferred in the securitization processes - well often they weren't actually transferred. Gretchen Morgenson has a good piece on how even the basic paperwork mechanisms broke down as the notes were wrapped like unfinished sausage and sold and resold:
On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.

With the sale set aside, Ms. Fernandez remains in the home. “We believe this loan was never assigned,” said Ray Garcia, the lawyer in Miami who represented the borrower. Now, he said, it is up to whoever can produce the underlying note to litigate the case. The statute of limitations on such a matter runs for five years, he said.
The NYT has been covering white-collars laid-off in their 50s and tossed aside.

Meanwhile, Obama's good political moments are best when taken out of context of the mandatory triumphal tone.
  • The answers to our problems don't lie beyond our reach. They exist in our laboratories and our universities, in our fields and our factories, in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth.
There's a nice inclusion of all walks of society, I thought. And then Obama said:
  • The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank.

    We have known for decades that our survival depends on finding new sources of energy, yet we import more oil today than ever before.

    The cost of health care eats up more and more of our savings each year, yet we keep delaying reform.

    Our children will compete for jobs in a global economy that too many of our schools do not prepare them for.

    And though all of these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.

    In other words, we have lived through an era where too often short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter, or the next election.

    A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future.
This was as direct attack on the Reagan- Clinton-Bush era as anyone could expect and on its most important feature - its rampant antiegalitarianism.

And then there was his explicit invocation of the destructive positioning of Wall Street and business leadership.
  • Now, I understand that, on any given day, Wall Street may be more comforted by an approach that gives bank bailouts with no strings attached and that holds nobody accountable for their reckless decisions, but such an approach won't solve the problem.
    And our goal is to quicken the day when we restart lending to the American people and American business and end this crisis once and for all. And I intend to hold these banks fully accountable for the assistance they receive, and this time they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer.

    This time -- this time, CEOs won't be able to use taxpayer money to pad their paychecks, or buy fancy drapes, or disappear on a private jet. Those days are over.
If those days are over, what are the new days? Money needs to arrive in employement offices and retraining centers and schools and colleges and businesses this week.

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