‘New Deal for Wall Street’ Programs Subsidizing Subprime Lenders
Courtesy of Jesse’s Café Américain
Welfare for Wall Street is just another phase of the ‘trickle down’ approach that seems to be so popular with the financerati.
If "Cash for Clunkers" had involved subsidized loans for cars administered by the banks it would have been touted as the greatest thing since sliced bread by the coporate media and mainstream infomercials, instead of being slammed on a daily basis as a troubled, pointless giveaway program.
So now we have a new "Cash for Criminals" program from the finance friendly folks at the tarnished Treasury and finagling Fed as outlined in the story below, this time for those overpriced housing loans sold to underpaid, over-indebted consumers.
The housing market needs to clear, the losses need to be realized, and the debt must be written down or taken into default by the banks.
The banks do not wish to foreclose because this will force them to start marking down the toxic assets they still hold on their books.
The Obama Administration is doing a fairly good imitation of Japan Inc.
Washington Post
Subprime Lenders Getting U.S. Subsidies, Report Says
By Renae Merle
Wednesday, August 26, 2009
Many of the lenders eligible to receive billions of dollars from the government’s massive foreclosure prevention program helped fuel the housing crisis by issuing risky subprime loans, according to a report to be issued Wednesday by the Center for Public Integrity.
Under the $75 billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.
Much "of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement.
For example, J.P. Morgan Chase, Wells Fargo and Countrywide, which has been bought by Bank of America, are eligible to receive billions of dollars under the program,…
The report comes as the Obama administration is prodding lenders to do more to help borrowers. Less than 10 percent of delinquent borrowers eligible for assistance through Make Home Affordable have received help, according to Treasury Department estimates released this month. The administration is aiming to more than double the number of borrowers helped under the program to 500,000 by Nov. 1.
"Mortgage lenders and servicers have been reluctant to participate in foreclosure prevention programs despite their role in creating the subprime debacle. Intense pressure from Congress and the White House hasn’t worked, either," the report said. "The stick has not been effective, so the Obama administration is offering a carrot — billions of dollars in incentive payments to lenders and loan servicers to encourage them to participate…"
