link here to article
Robert Kuttner discusses the issues involved in putting the mortgage mess behind us. The GOP has enjoyed the best of all political worlds. They have been able to turn populist reaction against the banks against the democrats by pinning the republican bailout of Wall Street on Obama. At the same time they have been the strongest defenders of banking interests in banking reform legislation and in the recent legal mess around mortgage servicing. The Obama administration has been less politically adept and it is divided over the mortgage issue. Tim Geithner and the Treasury Department are on the side of the banks which do not want to write down the values of the at risk mortgages that are on their books because this will impact profits and bonuses. Elizabeth Warren and several state Attorney Generals would like to fine the banks for purportedly illegal actions against homeowners and use the funds to reduce the principal on mortgages that are at risk in order to reduce foreclosures and improve the housing market. Kuttner does not understand why the administration does not take actions that would help the housing market and build populist support for democrats. Paul Krugman has a similar take on this problem in a related post.
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