Eighty percent of the banks and major financial institutions in this country were in danger of failing during the early days of the depression of 2008. This is the conclusion of a federal panel investigating the causes of the economic meltdown. Those same banks are now making strong profits due to some $12 trillion in help from the federal government and Federal Reserve. Meanwhile, a government watchdog reports a program aimed at modifying home mortgages and saving homeowners from foreclosure, is a failure and regressives want to shut it down.
John Paulson, a hedge fund manager, made $5 billion in 2010, as the economy recovered and cheap money made it possible to borrow low, lend high and take advantage of the improved corporate balance sheets world wide. Mr. Paulson is the same man who made $4 billion in 2008-2009 betting against collateralized mortgage securities being sold to pension funds and large institutional investors. In fact, Mr. Paulson helped Goldman Sachs set up one such vehicle called "Abacus". Mr. Paulson was allowed to pick which packages of bundled mortgages would be included in the offering and it appears he picked the worst mortgages to be sold to investors, and then bet they would fail, and made a fortune. No one knew of Mr. Paulson's involvement in "Abacus" which was a clear conflict of interest and caused the Securities and Exchange Commission to sue Goldman Sachs.
General Motors, Chrysler and other corporations were allowed to declare bankruptcy and get rid of a huge amount of debt and got the debt modified and restructured. Airlines like United used bankruptcy to throw their retirees under the bus getting permission to no longer pay for pensions and health care promised to their workers. Citadel Corporation, which owns KGO Radio, was allowed to go into bankruptcy and shed hundreds of millions of dollars in debt and re-emerge to continue operating and to give top executives huge bonuses. Yet, the one program aimed at helping average gum-chewing Americans stay in their homes, is a failure and should be shut down.
Neil Borofsky, the special inspector general for the government's bank bailouts, says the $341 billion bail out worked and returned the banks to profitability. He says the mortgage program "...which was the program that was supposed to help Main Street," is a failure. Originally intended to help 3 to 4 million homeowners stay in their homes, so far it has only helped a little over half a million. One of the worst offenders is JP Morgan Chase, which has modified just 67,722 out of over 200,000 mortgages while the company received tens of millions in tax payers funds to keep it solvent.
There are those who argue many of the homeowners don't deserve help because they borrowed more than they could afford to repay. The federal panel investigating the causes of the depression chronicled multiple abuses of the system, poor decision making by financial institutions, fraud, deception, poor regulation as reasons for the economic disaster. Despite all of these poor decisions...despite taking on huge debt and hiding it in many cases...despite almost destroying the economy in this nation, these institutions were bailed out. No one went to jail and now they are paying out billions in bonuses. Do you smell something rotten in Washington?
This home mortgage modification program is running on fumes at the moment. Main Street is once again being screwed while Wall Street returns to its profligate ways. If you are as outraged as I am, contact your representatives and demand the program be saved. Call, email or text Rep. Darrel Issa, a regressive Republican who chairs the House Oversight committee and demand he investigate JP Morgan Chase and others as to why they refuse to modify home mortgages.
It's called the Home Affordable Modification Program (HAMP). Will we really watch as the John Paulsens of the world make billions in bonuses and salary and corporate debt is "modified" in bankruptcy, while Americans, who can pay something, are kicked out of their homes? Wouldn't it be nice if instead of his new initiative to cozy up to corporate America, for once President Obama would draw one of his famous lines in the sand and stand up for Main Street? What do you think?