Neil Barofsky | DeMarco v. Geithner – Tim Geithner’s Principal Hypocrisy

Tim Geithner’s principal hypocrisy

Last week the acting director of the Federal Housing Finance Agency, Ed DeMarco, made a familiar argument. He announced that he would not approve the Obama administration’s request that struggling borrowers whose mortgages are backed by Fannie Mae and Freddie Mac receive debt relief through principal reductions subsidized by the Troubled Asset Relief Program (TARP). DeMarco’s refusal was based on his concern that granting such relief would encourage other borrowers to “strategically default” by not making payments on their loan to take advantage of the promise of a reduction in their debt. This is a version of the moral hazard argument we heard about so often in the early days of the financial crisis. Secretary Geithner, in response, argued in a public letter that notwithstanding such concerns, and for the greater good of the overall economy, such relief should be granted whenever it would result in a better economic outcome than foreclosure.

This is not the first time this debate is happening – but last time around, Geithner was the one arguing DeMarco’s points. Although one can argue whether principal reductions are the right way to address the ongoing housing slump – I have championed principal reductions for years but acknowledge that there are passionate arguments on both sides of the issue – no one should be fooled that the administration’s entreaties to DeMarco are anything but political posturing.

Rest here…


3 Responses to “Neil Barofsky | DeMarco v. Geithner – Tim Geithner’s Principal Hypocrisy”
  1. slappington says:

    Scanners were used in the early part of the 1990’s in order to defeat the monetary and clerking requirements necessary to the maintenance of reams of paperwork.
    The inability on the part of the banks to produce the notes (the pink slips) stems from the fact that the paperwork was destroyed during the process wherein the notes and liens were copied to disc.
    To suggest that anything else is the root cause behind the banks’ inability to manifest their claims against borrowers under any guise other than fraud, is, in my opinion, lunacy.
    To suggest that DeMarco and Geithner do not share the same standard in defense of the imperium is also, in my opinion lunacy.
    The difference seems to be that Geithner appears more exposed as the first centurion likely to surrender the eagle in the midst of native auxiliaries who are beginning to show every sign of rebellion in the face of those bent on protecting the true vandals who have opted to loot the republic.
    Truly, everything old is new again.
    The president would be well advised to step in and render unto the people that which is ours by birthright. I wonder if he needs reminding: ours is a republic based on the rule of law.

  2. Ken Hansen says:

    Barofsky’s searing indictments of TARP and Geithner are welcome, however the argument for principle reduction isn’t something we should allow the FHFA/Treasury to decide, since their priorities are not to assist homeowners, or necessarily promote homeownership. The argument that we should “let the market decide” is entirely dishonest. Only through deregulation, and massive fraud did the “market” create such destruction. In other words, the market is rigged, something so-called financial conservatives will never admit.
    The solution, instead, is Bankruptcy protections. Cramdown is kept away from you by financial institutions and their lawmakers. It is akin to not allowing slaves to be free of slavery. If the ability to lower the principle on a family’s only home was available with Bankruptcy, the enitre housing crisis may not have even happened. Loan sharks needed key deregulations, and they also needed to make sure rights of consumers were never a threat.
    Like slaveowners of past, the argument that giving people a break will lead to societal failure of some kind.
    Don’t be fooled, there is no passionate or credible argument to brutalize people.

  3. Tee says:

    Political posturing ,,,,ABSOLUTELY !
    Another thing cracks me up that they are worried that the home owners may screw them out of some money which is only money they stole. Another thing, I always felt safe knowing our government was looking out for its people….but……been many doubts lately.

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