Obama Buying Votes instead of Prosecuting Fraud

October 24, 2011 by  
Filed under Economics

A sinking President Obama is trying to buy votes from those who are already underwater. It is a waste of valuable government time and resources that could be better used.

The federal government has never accepted that all of its attempts to “rescue” the housing market are fruitless. Bad loans and unqualified homeowners are a sad fact of the real estate bubble. Nothing that Congress or the White House says or does can change that.

Actually, the White House probably does understand that. However, Obama and his team have been accurately labeled by most voters as economically incompetent. This is bad for them because election season is now upon us. It is time to buy some more votes, this time from “underwater” homeowners. According to the White House, these poor souls must be allowed to refinance their mortgages. The banks won’t do it and Congress won’t do it. So out come the “executive orders.”  Source: President Obama To Announce Major Revamp Of Home Lending Program, HARP.

This is so transparent. Don’t you agree?

Being underwater on your mortgage does not mean that you can’t afford your mortgage payments. It just means you aren’t highly motivated to make those payments. So this is really an effort by the Obama team to make the underwater homeowners feel less buyer’s remorse. They bought the wrong property at the wrong time and in the wrong place. It happens.

The Obama team should instead spend its time and resources prosecuting all of the bank fraud associated with stated income loans a/k/a “liars” loans that played a major role in the real estate bubble. Not even one lender or investment banker has been charged for their participation in this. To this extent, I agree with the Occupy Wall Street protesters.

After the much smaller savings and loan failures and scandals of the ’80’s, numerous criminal charges were brought, with great success. Why not now?

If you want a very clear explanation of how our government has failed to bring the Wall Street criminals to justice, listen to this report from NPR.  You will become angry. I did.

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5 Responses to “Obama Buying Votes instead of Prosecuting Fraud”
  1. PW says:

    We have some friends that walked away from their house about a year ago. They drive an expensive new BMW and Lexus, smoke, have the most expensive tv cable plan and the most expensive cell phones and cell phone packages, and instead of the husband trying to augment his income or find a better job, he sits on our neighbors patio with the TV on drinking a beer. They moved into our neighbors house because they could not find a place to rent that was “nice enough”. He was taken aback when we said we neighbors next door have no cable, no expensive cell phones and packages, we fired our landscapers and do our own yard and our cars are 2000 and 2003. He comment “I am not giving up everything that I enjoy”. And we want to give these people a break and have the taxpayers encourage this behavior? His job comment is that he worked as an appraisal when the real estate market was good and making close to a six fig income. He said he isn’t willing to take anything less–he is waiting for the real estate market to get better and refuses to go out and find a job. Wife works and they have 2 small kids. Wife’s paycheck doesn’t cover everything. Do we want to reward this behavior?

    • Evan says:

      I agree that we shouldn’t be bailing out the banks but I don’t think we should be prosecuting those that are participating in a strategic default. The bank knew what they were getting into (or they should be able to sue based on fraud)…

  2. MasterPo says:

    I don’t know how you can really differentiate between a “strategic” default and just a plain default (unless the defaulter actually says so I suppose).

    Either way, default is default and should be handled the same.

    Would be interesting though to have a legal case against someone who took out a loan claiming they never intended to pay it back. Fraud I suppose but isn’t that why collateral is put up?

  3. Jack Clark says:

    “Being underwater on your mortgage does not mean that you can’t afford your mortgage payments. It just means you aren’t highly motivated to make those payments.”

    No, being underwater on your mortgage means that your house, like almost all houses in the country has lost enough value that you now owe more than it’s worth.

    Any nonsense about “motivation” is just hearsay and drivel as each homeowner has a different set of circumstances and you can lump one situation and set of circumstances in with another.

    Doing that is both stupid and lazy.

    “this time from “underwater” homeowners”

    That’s half of the story.

    The other half of the story you omit from your comments is that people who are not underwater can and will benefit. Homeowners who do not have 20% equity can use this program to refinance and lock in lower rates that otherwise would have no ability to do so via traditional refinancing.

  4. Rick Beagle says:

    Personally, I am torn over this issue. I do admit to being angry that not a single Banker is in jail over the financial meltdown. The SEC has been gutted into a toothless organization, so even if we were to craft and enact into law the perfect set of regulations, that encourages business and discourages malfeasance, there is no one to enforce it.

    As to the complaints concerning people who have walked away from their loans in the manner given as an example above, based on the limited research I have seen, that is such a small percentage of the population as to make them statistically immaterial. The number of people who have an opportunity to benefit from this proposal, and have done their absolute best are another matter altogether.

    It is telling that any piece of legislation or policy that helps another person is considered “buying a vote”, but policies that help us are just “good sense”?

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