Home > Fande = Fact & Evidence, The Economy > How Wall Street Double-F*cked U.S. on the Bailout

How Wall Street Double-F*cked U.S. on the Bailout

source: http://www.nytimes.com/2011/03/30/opinion/30barofsky.html?src=recg

EXCERPTS:

“The act’s emphasis on [FIRST F*CK] preserving homeownership was particularly vital to passage. Congress was told that TARP would be used to purchase up to $700 billion of mortgages, and, to obtain the necessary votes, Treasury [Hank Paulson] promised that it would modify those mortgages to assist struggling homeowners. Indeed, the act expressly directs the department to do just that.

But it has done little to abide by this legislative bargain. Almost immediately, as permitted by the broad language of the act, Treasury’s [Hank Paulson’s] plan for TARP shifted from the purchase of mortgages to the infusion of hundreds of billions of dollars into the nation’s largest financial institutions, a shift that came with the express promise that it would [SECOND F*CK] restore lending….

It was therefore no surprise that lending did not increase but rather continued to decline well into the recovery. (In my job as special inspector general I could not bring about the changes I thought were needed — I could only make recommendations to the Treasury Department [Hank Paulson].)

Meanwhile, the act’s goal of helping struggling homeowners was shelved until February 2009, when the Home Affordable Modification Program was announced with the promise to help up to four million families with mortgage modifications.

That program has been a colossal failure, with far fewer permanent modifications (540,000) than modifications that have failed and been canceled (over 800,000). This is the well-chronicled result of the rush to get the program started, major program design flaws like the failure to remedy mortgage servicers’ favoring of foreclosure over permanent modifications, and a refusal to hold those abysmally performing mortgage servicers accountable for their disregard of program guidelines. As the program flounders, foreclosures continue to mount, with 8 million to 13 million filings forecast over the program’s lifetime.

Neil M. Barofsky was the special inspector general for the Troubled Asset Relief Program from 2008 until today.

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* Assisted by Hank Paulson, George W. Bush’s Treasury Secretary, Wall Street took taxpayer money to pay themselves bigger bonuses while double-crossing the taxpayers on the originally intended use of that bailout money to help the U.S. economy at large – creating jobs, lending money for investment, helping homeowners hurt by the rapacious behavior of the bankers tied up in Subprime-Mortgage-backed Securities.

Simply put, Hank Paulson pulled off the greatest confidence scheme in the history of the United States for the benefit of rich bankers at the expense of the majority of Americans.

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