As detailed here.

Rep. Barney Frank (D-Mass.), chairman of the
House Financial Services Committee, said the
administration's program would probably
require changes to federal law. Some of those
are already working their way through
Congress. But Frank said he is looking to
pull them together into a single housing
package.

The legislation would include a provision
changing the bankruptcy law to allow judges
to modify the mortgages of distressed
homeowners, including by reducing the
principal of the loan to the property's
current market value, he said. This proposal
has already gained support from one House
committee but drawn fierce objections from
Republicans and the financial industry.
Though Obama supports this provision, he
declined to include it in the stimulus bill
approved yesterday, fearing the bankruptcy
measure would derail the overall legislation,
Democratic congressional sources said.

Another provision, Frank said, would provide
legal protection to lenders who reduce
interest rates or otherwise modify the terms
of troubled loans for homeowners. Some
previous foreclosure prevention efforts have
been hampered by the threat that investors
who own securities backed by the mortgages
would sue to block loan modifications,
according to the financial services industry.
ad_icon

The package could also clarify Treasury
Secretary Timothy F. Geithner's authority to
use funds from the financial bailout program,
which was set up to rescue the banking
industry, to provide incentives to lenders
that modify troubled loans. The bill could
also make clear that the Federal Housing
Administration has the authority to bar some
lenders from its programs. That move would be
aimed at predatory lenders.

This sounds like a good step in the right direction.  I can see
how the banks and investors would scream bloody murder,
though. But is their own fault. For buying into the real estate
con in the first place. Most of these houses were priced way
beyond their value and the people who actually made hay
were the real estate developers and speculators who took the
money and ran long ago. The owners got scammed and the
banks got scammed and the investors got scammed.

Hopefully these institutions will use a bit more discretion
when writing these loans in the future and the price of
housing will reset to something more in line with it's
actual worth.

C

Glenn Greenwald make some valid points concerning those
who would genuflect towards Obama.

Republican groups demand from
politicians support for their beliefs.
By contrast, as Judis describes,
Democratic groups -- including (perhaps
especially) liberal activist groups --
now (with some exceptions) lend their
allegiance to the party and its leader
regardless of how faithful the party
leadership is to their beliefs.  That
disparity means that there is often
great popular agitation and political
pressure exerted from the Right, but
almost none from the Left (I'm using the
terms "Left" and "Right" here in their
conventional sense:  "Right"  being the
core of the GOP and "Left" being those
who most consistently and vigorously
opposed Bush's foreign and domestic
policies).

During the 2008 election, Obama co-opted
huge portions of the Left and its
infrastructure so that their allegiance
became devoted to him and not to any
ideas.  Many online political and "news"
outlets -- including some liberal
political blogs -- discovered that the
most reliable way to massively increase
traffic was to capitalize on the
pro-Obama fervor by turning themselves
into pro-Obama cheerleading squads.
Grass-roots activist groups watched
their dues-paying membership rolls
explode the more they tapped into that
same sentiment and turned themselves
into Obama-supporting appendages.  Even
labor unions and long-standing Beltway
advocacy groups reaped substantial
benefits by identifying themselves as
loyal foot soldiers in the Obama
movement.

The major problem now is that these
entities -- the ones that ought to be
applying pressure on Obama from the Left
and opposing him when he moves too far
Right -- are now completely boxed in.
They've lost -- or, more accurately,
voluntarily relinquished -- their
independence.  They know that
criticizing -- let alone opposing --
Obama will mean that all those new
readers they won last year will leave;
that all those new dues-paying members
will go join some other, more
Obama-supportive organization; that they
will prompt intense backlash and anger
among the very people -- their members,
supporters and readers -- on whom they
have come to rely as the source of their
support, strength, and numbers.

As a result, there is very little
political or media structure to Obama's
Left that can or will criticize him,
even when he moves far to what the
Beltway calls the "center" or even the
Right (i.e., when he adopts large chunks
of the GOP position).  That situation is
extremely bad -- both for the Left and
for Obama.  It makes impossible what
very well might be the apocryphal though
still illuminating FDR anecdote:

    FDR was, of course, a consummate
political leader. In one situation, a
group came to him urging specific
actions in support of a cause in which
they deeply believed. He replied: "I
agree with you, I want to do it, now
make me do it."

As Judis points out, Obama, on some
issues, might move to the Right because
he wants to.  In other cases, he will do
so because he perceives that he has to,
because the combination of the
GOP/Blue-Dog-following-caucus/Beltway-media-mob
might force him to.  Regardless of
Obama's motives, the lack of a
meaningful, potent movement on the Left
to oppose that behavior ensures that it
will continue without any resistance.
The lack of any independent political
pressure from the Left ensures that
Obama will be either content to ignore
their views or will be forced to do so
even when he doesn't want to.

His point is well taken. Co-opting ones principals for the
individual generally comes to no good. If the left wants
their ideas to become reality, it needs to be far more
aggressive about pushing them. After all the right does
not seem to have a problem doing this. It's what gave
us 8 years of the chimp.

C

Honest to god.

The pay rules, which will limit bankers'
bonuses to just a third of their total
compensation and force them to take it
in stock that cannot be sold until their
companies repay the government funds,
have enraged Wall Street executives.

Bankers argued that the amendment,
introduced by Chris Dodd, a Democratic
senator from Connecticut, would cause a
brain drain from the industry and could
have the counterproductive effect of
raising cash salaries.

Bankers' bonuses are typically several
times their salaries and capping them at
one-third of their total compensation
would result in a large pay cut for many
high-flying Wall Street workers.

If only that were possible. It should be obvious that there
simply are no brains on Wall Street to drain.

C

I like Robert Parry's take on the House especially.

Arguably, Obama is somewhat to blame for
this PR problem. He did try more than
probably made sense to reach out to
Republicans, speaking to their
congressional caucuses even before he
met with members from his own party.

Nevertheless, the bigger story is that
Mitch McConnell and other Republican
leaders appear to have committed
themselves to permanent trench warfare
against the new President out of a
calculation that his failure - and
presumably a worsening economy - will
boost Republican prospects in 2010.

Even senators, such as John McCain who
led the "Gang of 14" initiative to
prevent filibusters of Bush's
radical-right judicial nominees, have
embraced filibusters to cripple the
Obama administration.

Beyond the hypocrisy, this behavior
reflects a profound contempt for
democracy. Whether the Republicans like
it or not, the American people elected
Barack Obama by a decisive margin and
gave the Democrats increased majorities
in the House and Senate.

Instead of accepting those results and
serving as a loyal opposition, the
Republicans have fallen back to their
final line of defense - their strength
in the national news media - and they
have wheeled out the filibuster to blast
away at President Obama's hope of
enacting a coherent economic plan.

This strategy may or may not make for
smart politics - it certainly has
energized the Republican "base" but it
may be offending mainstream Americans
who want action on the economy.

But the GOP tactics don't represent the
natural way Washington has worked
throughout history. Filibustering at
every turn is not what a more
responsible generation of Republicans -
the likes of Bob Dole - would have done.

Agreed. However, I must say that these days responsible
and republican seem to be a contradiction in terms.

C

Frank Schaeffer explains why in this open letter.

Dear President Obama:

I know that from time to time you
read Huffington Post because you've
written for it. As a Huffington Post
reader you'll know that no one on
this web site has more faithfully
supported your candidacy and now your
presidency than me. As a former
lifelong Republican, son of a
co-founder of the Religious Right; my
late evangelical leader father,
Francis Schaeffer, I'm in a unique
position to tell you a few things
about the Republicans from inside
perspective. (As you know I left that
movement in the mid 1980s.)

The lack of cooperation you're
getting from the Republican Party
will continue. You were right to
indulge in a little bit of tokenism
when you had to Pastor Rick Warren
pray at your inauguration. But if you
think that the Republicans in
Congress and the Senate are going to
do more than their utmost to obstruct
everything you are and what you stand
for you're dreaming.

As someone who appeared numerous
times on the 700 Club with Pat
Robertson, as someone for whom Jerry
Falwell used to send his private jet
to bring me to speak at his college,
as an author who had James Dobson
giveaway 150,000 copies of my one of
my fundamentalist "books" allow me to
explain something: the Republican
Party is controlled by two
ideological groups. First, is the
Religious Right. Second, are the
neoconservatives. Both groups share
one thing in common: they are driven
by fear and paranoia. Between them
there is no Republican "center" for
you to appeal to, just two versions
of hate-filled extremes.

The Religious Right supply the kind
of people who at McCain and Palin
rallies were yelling things such as
"kill him" about you. That's the
constituency to which your hand was
extended when looking for compromise
on your financial bailout bill.

There's only one thing that makes
sense for you now. Mr. President, you
need to forget a bipartisan approach
and get on with the business of
governing by winning each battle. You
will never be able to work with the
Republicans because they hate you.
Believe me, Rush Limbaugh and Ann
Coulter are the norm not the
exception. James Dobson and the rest
are praying for you to fail. The
neoconservatives are gnashing their
teeth and waiting for you to "sell
out Israel" or "show weakness" in
Afghanistan, whatever, so they can
declare you a traitor.

The problem is that when you deal
with the Republican Party you're
talking to the polished characters in
Washington. I wish you could see the
hate e-mail's that I have received
over the last two years because I
supported you, letters calling for
God to kill me, telling me that I
hate God because I supported you and
that I am "an abortionist" and worse
a "fag lover" because I've written
that I believe that you will be a
great president.

What those senators and congressmen
are telling you is not what their
rabid core constituents are telling
them. Their loyalty is to a
fundamentalist Christian ideology on
the one hand and American
exceptionalism of perpetual warfare
and hatred and fear of the "other" on
the other hand. Between the
neoconservatives and evangelical
Religious Right Republicans you have
no friends.

The good news is that most Americans
support you. And if you will just get
in the face of the Republican Party
and call their bluff you'll be
surprised how many individual
ordinary Republicans will support
you, not to mention the rest of us.
America is sick of the Republicans.

The Democratic Party won for a
reason: the Republicans failed and
have taken us all down with them!
You're doing your presidency and
America no favor by extending an open
hand to the perpetually knotted fist
of what has become the embittered
lunatic fringe of our country. They
would rather go down in flames than
"compromise" their ideology.

As you showed us again at your press
conference of Feb 9, you are a
brilliant, articulate and decent man.
Your Republican opponents are not
decent people but ideologues bent on
destroying you. To quote the biblical
adage sir, don't cast your pearls
before swine.

Enough said.

Update:  Rahm Emanuel sees bipartisanship as a problem.

White House Chief of Staff Rahm Emanuel
conceded President Barack Obama and his
team lost control of the message for
selling their massive stimulus bill last
week, fixating on bipartisanship while
Republicans were savaging the legislation.

But in a wide ranging interview with
reporters, Mr. Emanuel said the
president's travels across the country
this week have shored up support for the
$789 billion measure. He strongly defended
the young Obama administration against
charges that its opening weeks have been
amateurish and mistake-prone.

Yes..I'd say so. Hope Obama has learned something from this.
Mainly that trying to deal with republicans is about as fruitless
a gesture as trying to calm a charging rhino.

C

Un-freaking believable !

One of the biggest causes of the
financial crisis was that
Americans were borrowing (and
spending) more money than they
could afford to pay back.

So how are credit-card issuers
reacting to consumers' attempts
to live a more financially
responsible lifestyle? They're
threatening to cut their credit
cards off if they don't spend
enough.

Oh and me ?? I haven't had a credit card of any kind for
years.

C

Seems as though Cantor has no intention of being civil. So why the
hell show I reciprocate. Whats sauce for the goose as they say.

House GOP Leader Eric Cantor
(R-VA) has remained silent on
his office's profane response to
a coalition supporting working
people and job creation. Cantor
apparently directed his
spokesperson to apologize in his
stead. The apology was accepted
by AFSCME President Gerald
McEntee whose members the
profanity laced video was
ridiculing.

Talk about how not to win friends and influence people.


C

The Savings part as explained here.

The savings rate, as calculated by the
Commerce Department, hit 3.6% in
December, or the equivalent of $36 for
every $1,000 of after-tax income.

That's up from 0.8% in August, or only $8
of every $1,000 of income. And since the
average income for Americans is flat to
slightly down during the past few months,
the only way the savings rate can rise is
for spending to fall.

"That's a lot of spending that's not
happening," said Mark Zandi, chief
economist for Moody's Economy.com. He
said the jump in the savings rate since
last summer is "the difference between an
economy that is growing and one that is
struggling mightily."

The government calculates savings by
totaling up after-tax income and
subtracting spending. The remainder is
considered savings by the government even
if consumers are using the leftover money
for investing or paying down debt instead
of saving it in a bank.

With easy credit, spending is easier to justify because you can
put off having to pay. Psychologically it's like having free money.
Just haul out the plastic. But when you are actually hauling out
the wallet and the cash, one becomes more circumspect about
ones purchases. And a falling economy just intensifies this.
This aspect will take a lot longer to overcome. Will the stimulus
help this ? I have my doubts.

C
 

As Nicholas von Hoffman observes.

People are furious, all kinds of
people for all kinds of reasons, most
of which are good and sufficient, if
not always prudent and well thought
out, but they've used, gamed, duped,
lied to, betrayed, ripped off,
conned, humiliated, scammed, cheated,
plundered, rooked, screwed over,
hosed, dissed and dishonored.
Americans, left, right and center,
have had it.

Some are angry over Guantánamo, Abu
Ghraib, the countless deaths--our own
and others--in Iraq, waterboarding,
torture, eavesdropping, the
suspension of habeas corpus and other
acts classified as war crimes or
crimes against humanity. Many cannot
forget and certainly not forgive, as
they demand that former President
Bush, Dick Cheney--he of the
lopsided, evil grimace--and their
aides or accomplices should be tried
for what they did.

Others are apoplectic about Bob
Rubin, the ex-secretary of the
treasury, ex-Goldman Sachs,
ex-Citigroup guy and his
confederates/collaborators. They want
them put on trial, those men and
women who, in the opinion of the
infuriated millions, ruled and raped
the financial system. It's easy to
imagine vigilante committees forming
to administer frontier justice to the
bankers, brokers, hedge fund
operators, real estate swindlers,
derivative peddlers and bucket shop
operators who have cost millions of
people their homes, their hopes for a
college education, their retirement
and, most of all, their jobs.

He does suggest a possible legal recourse, however.

The financial malefactors, on the
other hand, should have to answer for
what they have done, otherwise the
endless palaver about accountability
is just that: words.

They are beyond most criminal law,
which is to be expected since the
bankers and financiers hire the
politicians who write the laws. Civil
law is another matter. Given the
oversupply of overly clever lawyers,
there ought to be a couple of smart
ones who can spin together the legal
theory on which to sue Rubin and
about 200 of the other top people who
have brought economic disaster down
on our heads.

Rubin may not have been the
mastermind--there might not have been
one--but he was in the control room
throwing switches. As secretary of
treasury he played a principal role
in making sure nothing was done ten
years ago after Brooksley Born, then
chairman of the Commodity Futures
Trading Commission, warned that
unregulated derivatives "pose grave
dangers to our economy." Did they
ever!

After leaving the Treasury with the
road clear for the puppet masters of
high finance to do anything they
wanted, Rubin hied himself off to
Citigroup, where he was paid $150
million to do his share in bringing
the organization to ruin and untold
billions in bailout money.

Rubin may be vulnerable under a
federal criminal statute that makes
it a crime to commit what is called
"honest services fraud," defined as
"a scheme or artifice to deprive
another of the intangible right of
honest services." A big shot
convicted under the law could service
as much as twenty years in a federal
hostelry. Rubin and the others who
drove their companies onto the rocks
could be made answerable for their
conduct given the right grand jury
and a US attorney with a yen to make
himself or herself famous.

While Rubin may be the best-known
master of disaster, he had many
comrades in trading worthless
securities--which, by a layman's
definition if not a lawyer's, is as
fraudulent as anything Bernie Madoff
is accused of. If we cannot put these
people in jail, we can sue the hell
out of them, take away their money
and give it to the unemployed.

Taking their money away is not as
good as a hanging, but seeing them
turned out of their mansions with a
tin cup and cardboard sign should
assuage some of the anger.

Well maybe not as good as hanging. But it's a start.

C

I swear. Geithner is such a jerk.

In the end, Mr. Geithner largely
prevailed in opposing tougher conditions
on financial institutions that were
sought by presidential aides, including
David Axelrod, a senior adviser to the
president, according to administration
and Congressional officials.

Mr. Geithner, who will announce the
broad outlines of the plan on Tuesday,
successfully fought against more severe
limits on executive pay for companies
receiving government aid.

He resisted those who wanted to dictate
how banks would spend their rescue
money. And he prevailed over top
administration aides who wanted to
replace bank executives and wipe out
shareholders at institutions receiving
aid.

They (the executives) should be replace and to hell
with the share holders.

(Sorry this pisses me off Big Time)

C

Here is.



C

Joseph Stiglitz lets his views be know on a DW interview.

DW-WORLD: Many experts fear that
while things are bad now, we haven't
seen the worst of the crisis yet. Do
you share the belief that we are
facing a long decline that could
rival the great depression?

Joseph Stiglitz: We live in a very
different world than during the Great
Depression. Then, we had a
manufacturing economy. Now we have a
service-sector economy. Many people
in the in the United States are
already working part time because
they can't get full-time jobs. People
are talking more about the
'comprehensive' measures of
unemployment, and these show
unemployment at very high levels,
around 15 percent. So it clearly is a
serious downturn.

Another big difference between now
and the Great Depression is then we
didn't have a safety net. Now we have
unemployment insurance.

Economists Nouriel Roubini and Nassim
Taleb, who predicted the global
economic downturn, have called for a
nationalization of banks in order to
stop the financial meltdown. Do you
agree?

The fact of the matter is, the banks
are in very bad shape. The U.S.
government has poured in hundreds of
billions of dollars to very little
effect. It is very clear that the
banks have failed. American citizens
have become majority owners in a very
large number of the major banks. But
they have no control. Any system
where there is a separation of
ownership and control is a recipe for
disaster.

Hypo Real Estate bank sign with down
arrowBildunterschrift: Großansicht
des Bildes mit der Bildunterschrift:
Nationalized banks? Stiglitz says
'yes'

Nationalization is the only answer.
These banks are effectively bankrupt.

Well that about sums it up. But you won't hear the
"B" word with respect to these banks on our media.

C