Around $30 billion allocated in the Troubled Asset Relief Program (TARP) to help struggling homeowners will likely be paid on the national debt instead, reports ProPublica, a self-proclaimed “independent, non-profit newsroom” dedicated to “exploring the abuses of power and betrayals of the public trust by government, business and other institutions”[1]. The report indicates that while about $2 billion of that money has been used for homeowner aid programs, the remainder has been “mandated” by Congress to be used to pay down the national debt[2]. The excess monies remain in TARP coffers largely because of the profoundly poor performance of federal homeowner help programs like the Home Affordable Foreclosure Alternative (HAFA) program, Home Affordable Modification Program (HAMP) and Home Affordable Refinancing Program (HARP), all of which have significantly underperformed projected goals. And while the federal government protests that it actually is on track to spend $7.2 billion helping homeowners, those monies are scheduled to be paid out as incentives over a number of years rather than on new homeowners entering the programs. Most of these programs are currently slated to close in 2012 or sooner.
According to TARP regulations, any money that remains unspent must be redirected toward paying down the national debt.
Do you think that this redirection is appropriate since it seems pretty obvious that the government is incapable of “fixing” the housing market through direct interference?
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[1] http://www.propublica.org/about/
[2] http://realestate.msn.com/blogs/listed-loans.aspx?post=405f0b28-d102-4b47-bee6-844830ef3bb4?ocid=fbmsnre
What we need is (1) good jobs, not the jobs we’ve been creating lately, and (2) housing market recovery, which won’t happen by throwing money at banks, which is where it has been going. We have become a third world country by having tax and trade policies that enable all the wealth to become concentrated at the top, while our newscasters tell us that any redistribution the other way (as advocated by the billionaire capitalists who realize that poor people can’t consume enough to get us out of this recession) is class warfare. Class warfare? You bet. We went to war with Britain because we didn’t subscribe to the concept of a royal class deriving its authority from God–it’s time to war against the concept of a monied class deriving its authority from the laws of economics and human nature (neither of which is based on reliable, replicable science). Fox News thinks that the bottom 50% of our citizens, who pay no income taxes because they control only a 2.5% share of our wealth, should start paying them. I think the bottom 50% should get out in the streets, like the Greeks. But I know that revolutions start with overprivileged students (like Marx, Lenin, Mao, & Castro) who have enough leisure to put together a coherent theory of what’s wrong with the ruling class and why they should be overthrown. Eventually, someone will put together a theory describing American classes and why the idea of classes, whether derived from God or Mammon, should be resisted, and others will rise up like Dr. King & Malcolm X, to resist both nonviolently and violently.
So sure, TARP money might as well go to paying down debt, because we can’t afford to hire people to do real work sorting out those who could benefit from loan modifications from those who should go back to renting while we pay people to do make-work hindering travelers at airports and borders or locking up the unlucky, the ignorant, the stupid, and the mentally unbalanced with hardened criminals. The debt won’t stay paid down as long as we keep throwing money at homeland security, defense, prisons, and the war on drugs, especially now that we’ve screwed up the economy so that one in seven of us qualifies for food assistance and screwed up the environment so that 100-year catastrophes happen at least monthly.
Finally, about “fixing” the housing market. Some advocate tearing down foreclosures, eventually creating scarcity that will make it necessary to build again. I suggest that we win hearts and minds by inviting NGO’s to dismantle foreclosures and put them back together elsewhere (like Haiti or Afghanistan), while creating enough engineers to figure out how a typical American house would need to be reconfigured to fit a typical family in another country.
There is no surprise in the Government’s mishandling of funds regardless of the intended purpose. All one has to do is check the record. Each time a fundable program is started a large percentage is exploited in handling and preparation costs. The reason: There is no single entity that knows how to bungle a project better than The Federal Government. It’s classified as; greed, greed, greed.
The reality is that the original TARP of $700 Billion has been almost entirely repaid. A year ago, all but 29 Billion had been recovered – I’m not sure where it is today. The point is that it was a proper and good response to an unusual crisis situation, and very little of it was designed to go to homeowners. Yet I believe it helped prevent an even more severe downward spiral in the greater economy. And Yes, it could have been much worse than it is.
Of the portion that was designed to benefit distressed homeowners, HARP, HAMP & HAFA, much of it failed because it was so poorly thought out. I get the impression that they did not get input from the few experts who understood the complex reality of most mortgages. Fortunately, HAMP modifications seem to be going a bit better, and to the extent that they do – I believe it’s a huge benefit to homeowners by facilitating a reduction in payments so they can keep their homes, and in turn, to everyone else.
Perhaps more importantly, the HAFA Short Sale program is finally improving to better address the realities of the market. It’s still mired in some red tape and inefficiency, but in most cases where a HAFA short sale is approved – it is truly helping those homeowners who need it the most, and at a reasonable transaction cost. Whether the administrative costs will have been reasonable – well, I seriously doubt it since the government has a very poor track record in that regard. So it’s a high price, but we are getting somewhat better stability – which benefits even those who are still employed. This is a complex issue- it’s foolish to paint it all either black or white.
Regarding ‘Jim’ or whatever the first poster’s name is above (it’s obscured by the photo/avatar icon) – You are wrong and a fool. Most of the bottom 50% stay there because we pay them to stay there. Think about it- Why work – if I can get government benefits for doing nothing. The enemy isn’t the government, it isn’t the rich, it isn’t the poor – it’s our own selfishness. The poor aren’t automatically more virtuous than the rich, nor the reverse. Some of the biggest givers are the very rich. Some of the most greedy are the rich. Same with the poor.
You advocate class warfare – but what you will you have after some ‘wealth redistribution’? I’ll answer that for you: Only unending warfare – where the strongest & most violent benefit from the destabilzation. Look at Russia or Mexico or Cairo. Then thank God that you live here where we have our problems, but we also have peace, security, opportunity, and law & order. I’m sure you’ll sneer at that because your words indicate that you’re an idiot, but if you doubt it – go try to be an honest & successful businessperson in Moscow or Mexico City.
You won’t of course. You’re more worried about our government spending money on defense & the war on drugs? Wow. Put your joint down & see if you can get your head clear long enough to understand this: Legalization will not make it any better. Drugs are an enemy of a civilized society. Sure, you might be able to paint a prettier unicorn or magic dolphin while you’re high Jim, but when people are doing work that’s actually productive & benefits the standard of living of the world, it causes productivity to go down the tubes & crime of all kinds to skyrocket. Drug use advocates are some of the most self centered, pathetic people on the planet – who will take ridiculous leaps in logic to try to justify their narcissism.
Ok Jim, you may now return to your regularly scheduled rant against Fox news or other terrible & scary bogeymen. However, don’t forget that Greece (and most of the other countries in trouble) went broke by giving away more & more benefits. Also remember that every government cost, entitlement, and job is a drain on the rest of the economy because it exists on the backs of the producers, so there’s a limit to how far it can go. Yes, government must exist, but it must also be limited. As a conservative, I oppose excess entitlements – not because I want to ‘kick poor people to the curb’. Not at all. I want the best for all citizens, but I believe that programs that make able bodied people to work for their benefits would be a better long term solution (for a variety of reasons) than paying them to sit on their butts watching Jerry Springer.