Treasury and Obama are facing huge financial pressure.
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| Economic Hitmen |
Nomi Prins
Alternet
At first, there was a deafening silence from Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke on the foreclosure front. It was as if they: 1) didn’t read the news; or 2) were afraid someone would notice afresh their incompetence in dealing with the ongoing housing crisis and deteriorating economy, while convincing everyone that the bank bailouts and subsidizations were good for us.
Last week, while Senator Harry Reid, House Speaker Nancy Pelosi and others in Congress were dispensing irate pre-election sound-bites, attorneys general across the country were gearing up for investigations. Banks were reluctantly announcing foreclosure moratoriums because it’s quarterly earnings season and uncertainty is bad for stock prices, and Geithner was defending TARP and mixing it up with China over the dollar. Meanwhile, the Fed was gearing up to buy more Treasuries, like some kind of rapacious alien that eats its progeny, because no one else wants our debt.
But that changed when Geithner came out of hiding yesterday with a stance. (Bernanke is still in hiding, but will support Geithner’s view soon.) Unsurprisingly, Geithner chose to side with the likes of conservatives and CNBC. Thus, his response to Charlie Rose when asked whether he supported banks in declaring a foreclosure moratorium was: “No, I wouldn’t say it that way.”
Why? Geithner’s logic follows the typical blame-the-little-guy-for-taking-on-too-much-debt-to-buy-a-house-he-couldn’t-afford pattern, coupled with old-style fear-mongering: if you wait and analyze what’s really going on, it might be bad for the housing recovery. And, what housing recovery is that? The one in which 25-30 percent of homes being sold are REOs (bank owned real-estate, a.k.a. foreclosed properties). On a trading floor, that’d be considered “churning,” not new value.
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