Wednesday, March 11, 2020

Way Off The Mark, Bill

Although Bill Maher frequently hits the target in closing comments on Real Time, a portion of his remarks last Friday could have come from a press release from the Barack Obama White House. Maher claimed (beginning at 2:07 of the video below)

In 2008 nobody took more money from Wall Street than Obama. Then he got elected and passed the biggest Wall Street reform n generations. He made Elizabeth Warren's plan, the Consumer Financial Protection Bureau, a reality.

So when he ran for re-election, Wall Street was pissed and did not give him nearly as much. But he took what they gave and then he f_ _ _ _ _ them again.

This is how you play the game- call him impure, a corporatist, a moderate. The fact is he did more to rein in Wall Street than all the peacocking, correct-board socialists combined.

Of course, we haven't had a socialist president ever and after primaries in South Carolina, on Super Tuesday, and on March 10, that streak will continue. As David Dayen wrote in 2016, that because "most" of Dodd-Frank (to which Maher was referring)

was designed to secure the system during a crisis rather than prevent that crisis from occurring, we cannot hypothesize about its effectiveness until that crisis hits. And since the basic structure for banks to take huge risks and connect them across the financial system remains in place, a crisis appears inevitable.

So we don't know how that (tepid) financial reform will function when the chips are down. However, some things are knowable. While acknowledging (modest) health care reform, advances for gay rights, and a stimulus program which brought us out of the Great Recession (into the weakest economic recovery in decades), Dayen in 2015 had noted President Obama

must also own this tragedy: the dispossession of at least 5.2 million US homeowner families, the explosion of inequality, and the largest ruination of middle-class wealth in nearly a century. Though some policy failures can be blamed on Republican obstruction, it was within Obama’s power to remedy this one — to ensure that a foreclosure crisis now in its eighth year would actually end, with relief for homeowners to rebuild wealth, and to preserve Americans’ faith that their government will aid them in times of economic struggle.

Faced with numerous options to limit the foreclosure damage, the administration settled on a policy called HAMP, the Home Affordable Modification Program, which was entirely voluntary. Under HAMP, mortgage companies were given financial inducements to modify loans for at-risk borrowers, but the companies alone, not the government, made the decisions on whom to aid and whom to cast off.

In the end, HAMP helped only about one million homeowners in five years, when 10 million were at risk. The program arguably created more foreclosures than it stopped, as it put homeowners through a maze of deception designed mainly to maximize mortgage industry profits.

Maher believes that the financial services industry gave to Obama in the 2008 election cycle because it expected more than it got. Then displeased at financial reform, it turned off the spigot in 2012. However, the reversal of course probably was not due to the Democratic nominee but rather his opposition. In 2012 Obama faced the Wall Street dream ticket of Romney-Ryan four years after a challenge from the unpredictable, "maverick" McCain-Palin ticket.  Dayen recognizes

Indeed, the administration missed or delayed several opportunities to provide relief and prevent foreclosures while also boosting the economy. During the 2008 presidential debates, John McCain proposed a $300 billion plan to buy up mortgages and renegotiate their terms, similar to the Depression-era Home Owner’s Loan Corporation. There were also bipartisan calls for a mass refinancing program for underwater homeowners, which would save them billions in monthly payments. Ultimately, the administration never tried to buy mortgages (though plenty of hedge funds did), and their refinancing program didn’t produce even its meager results until 2012, years after the crisis erupted.

There is a reason that Barack Obama is called a "corporatist" and a "moderate." He is both, and might even accept the latter characterization.  No one calls him "impure," which is merely Maher's interpretation of criticism of the President Who Is Beyond Reproach.

Give the guy credit- he was a better president than his predecessor and far better than his successor. That is not nothing.  However, it's not a portrait of a chief executive who struck fear and loathing in the financial services industry.

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