Why Obama’s refinance plan is still missing the point


Yesterday, President Obama announced that he used an executive order to revamp the rules for the Home Affordable Refinance Program. The hope is to make it easier for struggling homeowners to refinance their mortgage and take advantage of historic low interest rates.  The new rules include allowing homeowners who owe more than 125% of the value of their home to refinance their homes as long as they are current on their mortgage. The process is also supposed to be streamlined and eliminating some of the fees. White House officials estimate these new changes will help 1 million homeowners (14 million are underwater) get some relief.

Forgive me if I sound skeptical.  The last time the administration announced a refinance plan, they estimated 5 million people would be helped. So far, less than one million have been through the program. Once again there is a lack of standing up to the banks.  The only loans that qualify for the program are those held by Fannie and Freddie.  The reason why the initial version of this plan and other plans to confront the crisis have failed, is because they lack any real pressure on the banks.

I am sure a decent number of homeowners will get relief from this move, but the impact on the crisis will be minimal.  These loans are not the ones hurting the housing market, since they aren’t sitting empty or for sale.  These are homeowners who while underwater are still current on their mortgage and not in danger of facing foreclosure.  The administration has said this will be the first in a series of moves, but once again I will not be holding my breath.

Until the President and Congress are willing to stand up to the banks, hold banks accountable, and force them to  help fix the crisis, any program will have minimal impact.  We can’t continue to use a spray bottle on a wild fire when it comes to finding solutions.  Until someone is willing to stand up to the banks that is all we will be doing.

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Courage to lead


Last night NJ Governor Chris Christie gave a speech at the Reagan Library in California.  He basically announced himself as the second coming of Reagan.  Even though he still wants people to believe he will not enter the race, he used the opportunity to attack the president and lift himself up.  He wants to lift himself up and bring down Obama on the topic of leadership.

“We watch a president who once talked about the courage of his convictions, but still has yet to find the courage to lead.”  This was a key quote from his speech.  I will admit, I don’t know all the details of what Christie’s record looks like in NJ. So I am not going to attack his leadership ability until I know what he has done.  Even then, I am not sure I would attack his leadership.  To me, part of being a leader is standing for something even if it is not popular. I think attacking someone’s leadership on topics that you don’t agree is pretty weak.

As much as I was not a fan of Bush, Jr.  I would not question his leadership.  He led the country after 9/11 and even if I could not agree on all of his policies, he did what he had to do even if everyone did not agree with him.  I support our current president, but have not agreed with everything he has done, but I believe he is doing what he believes is right.  Standing for what he believes is right, even if everyone won’t agree is part of leadership.

I understand if you can’t agree on his policies, attack his policies.  But don’t attack his leadership or his courage to lead simply because you don’t agree with where his plans have taken us. Understanding the line between attacking or disagreeing with someone’s policies and attacking their leadership or courage to lead is also part of being a leader.  So maybe Christie needs to work on what it means to be a leader.

Will the American Jobs Act Go Anywhere?


After all the dust has settled from the speech, a huge question remains.  Will this go anywhere?  As I wrote in my last post, I think the speech did enough to put pressure on both sides.  This increases the likelihood that something gets done, but is it enough?  Maybe the answer is, not so fast.

Nothing in D.C. is ever what it seems.  For most of the off-season Washington Redskins fans thought John Beck was going to be the starting quarterback. Instead Rex Grossman will be under center week 1. Football references aside, things in the nation’s capital tend to change quickly.

During the speech, several items like corporate taxes and entitlement reforms brought republicans to their feet.  In the immediate aftermath they admitted that there was a lot to work with.  No one wants to seem like they are against creating jobs, so the popular thing to do was say let’s get to work.

The devil will be in the details though. The president promised that everything would be paid for, but failed to deliver the details.  He promised in the coming week that the details would be revealed.  Those details will determine how much support republicans give him for paying for this.

He talked about improving on the corporate tax rate by closing loopholes.  What loopholes will be closed and how will that lower the highest corporate tax rate in the world?  He mentioned entitlement reform, which will upset his base, and in theory draw support from republicans.  However, we need to know what that reform will look like.  Is it just making cuts, or eliminating waste?

When talking about rebuilding our infrastructure, the key is shovel ready projects.  The last stimulus promised similar construction projects, but found a lack of shovel ready projects.  For this to work, there needs to be a plan at improving the number of shovel ready projects.  The other issue is dealing with foreclosures. While it is great to talk about helping struggling homeowners refinance and capitalize on low rates.  We need to know how we get this done.  What is the plan to help those whose credit scores are too low?  What is the plan for those who are unemployed or underemployed?

The point of all this is that the details still are coming out, and depending on what these details say will determine if this goodwill continues.  I for one, am worried about these details.  I am not sure that both sides are going to hear what they want.  Once all the goodwill is gone and they get to work, we could be setting ourselves up for another nasty stalemate.  No one wants to be seen as stopping job growth, but they also don’t want to create jobs at any cost.

My Quick Take on the Jobs Speech


While under ordinary circumstances, this night would have been all about football these aren’t normal times.  The current crisis calls for action to create jobs and address the foreclosure crisis in order for us to move forward. People have been waiting for a comprehensive jobs plan to come out of D.C. and the speech was to deliver that plan.

President Obama was back to his old campaign form.  The speech felt like one of the moving speeches from the campaign, where you were captivated even if you didn’t agree. I think he played both sides well.  For his base, he focused on stimulus through tax breaks for the middle class, and job creation through rebuilding infrastructure.  He also played to republicans by mentioning the corporate tax rate, entitlement reform, and a mention about regulations.  He catered enough to both sides that I think there is real pressure to get something done. Even in a post speech interview Eric Cantor ( R-VA), couldn’t disagree much and admitted there was a lot to work with in the speech.

With all that being said, I think there were some specifics that could have used some more details.  He mentioned that everything would be paid for, but left us waiting for the specifics.  Yes, he mentioned cuts already made, and promised a detailed plan in the coming week, but some of those details would have been useful. When talking about eliminating loopholes to lower the corporate tax rate, while I know there are many options, but mentioning one or two of the possibilities would have been nice.

My biggest issue with the speech, was the plan for the foreclosure mess seemed like an afterthought.  He mentioned a refinance plan to capitalize on the low rates, but left it at that.  I have been critical of his foreclosure prevention plans in the past, and feel that more attention needs to paid to this issue.  I wanted to hear a strategy to address the refinance plan in the speech, but will have to wait for future speeches I guess.

Overall, I though the speech hit the right points, and had Obama in campaign mode, which really helped him shine.  Once the dust settles from this it will be important for us to hold congress accountable to get this done.

Race in Politics Not Headed in the Right Direction


There has always been a racial component to politics in this country.  Even after the Civil Rights Movement, this racial dynamic was clearly up for display.  As time wore on though, and more minorities became involved and elected in politics, that dynamic has shifted from obvious to a more underlying position.  Since the election cycle of 2008 that has all changed, and not just in Washington.  Ever since Obama was a candidate, that racial dynamic has once again begun to shift from underlying towards obvious.  During his campaign, it was widely discussed whether a black man could become president.  There were groups of people who would not vote for him simply because he was black.

It continued after the election and still continues with the rise in white supremacy groups.  But it is deeper than that.  As the mission of the republican party has become to not let  him succeed at all cost, the racial dynamic has moved from white supremacy groups to the halls of congress.  Even if they will not come out and say it, there has been a racial component to their strategy.  The questions of his birth certificate, the outright brashness of calling him a liar, interrupting the state of the union, and more recently the use of “tar baby” are unprecedented attacks on a president.  No president in history has faced the same kind of treatment from the halls of congress.  The rise of the tea party has not helped that dynamic either.  The racial atmosphere that appeared at tea party rallies during the health care debate was troubling.  Despite the rise of Herman Cain as a tea party candidate, you cannot deny the racial component to that movement.

Let’s take it one step further.  The attack on both a federal and state level on programs that are designed to help the poor, is also ripe with racism.  A disproportional amount of people who receive government assistance are minorities, and the disregard our elected officials have towards them is disturbing.  It is continues to bleed down to the lower levels of government as well.  The North Carolina State Legislature has been attacking policy like the Racial Justice Act, and early childhood for poor and at risk children.  If we take one step further, we can look at the Wake County School issue.  Regardless of how you feel about busing and socioeconomic diverse schools, the root of why people wanted to policy to change was a new approach to nimbyism.  A certain subset of people no longer wanted poor kids to be sent to the schools in their neighborhood.  Let them go to school where they live is written all over this, whether they want to admit it or not.

Many people wrongfully thought that the election of Obama pushed America into a post racial society. I would argue that it has done the opposite.  That election has had an impact on the racial dynamic of this country, but not for the better.  What it has done is moving racism back to the forefront.

Obama Gets “C” on Financial Report Card


This posting while written by me was originally published on www.policymic.com.

With Congress working to end the administration’s programs to scale back the foreclosure crisis, RealtyTrac and Trulia released the results of a study that show 54% of adults believe the housing crisis is here until at least 2014. When I think about grading President Barack Obama on financial justice issues, I must decide what should be defined as financial justice. Understand the state of the country when he first took office: America faced a housing crisis due to the lack of regulation of banks and the subprime market, and foreclosures were about to rise not just from bad loans, but from homeowners losing their jobs. I would give the president a C on financial justice; Obama has succeeded when it comes to regulating banks to prevent a future crisis, but he has lacked when dealing with current foreclosure issues, leading to an uncertain future for the long-term health of the housing market and prices.

Foreclosure Prevention Programs

The housing market began to deteriorate and foreclosures began to rise in 2007, but the bottom came in the fall of 2008, catapulted by the fall of Lehman Brothers. In March 2009, the administration made a decision to step in and help save some mortgages. It launched a series of programs under the Making Home Affordable Program. The Home Affordable Modification Program (HAMP) was one of these programs to be run out of the Treasury Department. HAMP set guidelines for what was needed to modify a mortgage, and banks and servicers were invited to participate. One key component here was that nothing was mandatory for the banks; their participation was strictly voluntary. The program was supposed to help save millions of homes from foreclosure and hold off the crisis. In reality though, the program has been a failure.

According to the latest scorecard, there are only 609,615 active permanent modifications from 2,684,832 eligible delinquent loans. Early in the process, trial modifications lasted three months, and could last longer than six months without a permanent modification being offered. Housing counselors still have issues with aged trial modifications.

No program under the Making Home Affordable Program has had the level of impact that was hoped for. Though some homes have been saved, the expectations were to save millions of homes. That has not been the case.

Grade: F

Bank Regulation

Once Obama finished dealing with Health Care Reform, he turned his attention to financial reform. The House and the Senate debated numerous proposals before the Dodd/Frank Act took center stage as the bill of choice. This bill was massive in scope and covered almost every facet of the banking industry. The biggest component of this reform in bill was the creation of the Consumer Financial Protection Bureau (CFPB). This all-encompassing regulatory body was to be independent from Congress and would be the one regulatory body that covered banks. Many of the rules relating to the CFPB will go into effect on July 21, 2011 — they recently launched a website, and the implementation team is working to lay the initialgroundwork. The Republican leadership in the House, who have always opposed the creation of CFPB, is trying to weaken the agency before it can even get off the ground. The banking industry has not been very excited about this, and spent millions of dollars trying to defeat it.

There are some components of this reform bill that may not be great for consumers. Banks are going to find a way to pay for increased costs that are a result of more regulation, and pass that cost on to consumers. There are some amendments, like the Durbin Amendment, that may increase the cost of goods for low-income families as a result of capping interchange fees for big banks. But it will not cap these fees for small banks, which include many providers of prepaid cards. These added costs of reform make it difficult to give the highest grade possible, but I believe that the majority of these reforms are a step in the right direction.

Grade: A-

Final Grade

You can see from my perspective, the president has been hit or miss on financial justice. He has been successful on bank regulation, while his performance on the foreclosure crisis has been abysmal at best. I think his overall grade is right in the middle, and there is definitely room for improvement. Even though I have been a supporter of Obama, I am not sure this is one of his strongest successes so far.

Overall Grade: C