Some of you may get tired of my writing about Barack Obama and what his policies will mean for the real estate industry. Frankly, I get sick of having to write this stuff, because it means bad things are happening. But you’ll want to read this entire post, because it directly effects the funding of every part of our economy – including real estate.
The latest case-in-point: According to the Wall Street Journal, the Obama administration is actively refusing repayment of TARP money from some of the larger banks. (TARP – Toxic Asset Relief Program – is the name of the program under which the government lent money to financial institutions.)
Why would Obama do that? One reason: Control. Obama’s objective is clearly to control the banking industry rather than to merely recapitalize it. And as long as these banks still owe the government money, Obama has the power he wants.
This is an intensely political strategy, and a very dishonest one. The U.S. House (controlled by Obama’s Democrat party) just passed the Pay For Performance act, which gives the government the right to set pay levels for anyone working in any company that has accepted TARP money.
Do you think Obama is likely to stop with merely controlling what employees at these companies have been paid? I don’t think so.
If the Obama administration controls management at these banks, they directly set lending policies. Do you think it’s possible they could use such authority to make politically motivated decisions? Without a doubt – the refusal to accept TARP repayments is just such an example.
What sort of politically motivated decisions could happen?
The first one that comes to mind for me is to quietly tighten the availability of credit for real estate and business loans for geographic areas in which Obama’s opponents maintain political control. This would have the effect of hindering the economy in those specific areas, making the re-election of Obama’s political opponents less likely.
Do you think that’s a far-fetched idea? I might have thought so too – if the Obama administration wasn’t actively refusing to take back money from lenders who are sufficiently solvent to repay their debts. Further, Obama has already established the ability to fire executives he doesn’t like from TARP-infested companies (like Rick Wagoner, former CEO of GM).
This is insidious and a clear step in the direction of Obama’s intention of establishing complete government control of the financial system. This has everything to do with real estate. The real estate market is where this whole mess started – all because of foolish government policies towards lending. And now those policies could become far more heavy-handed.
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