Barney Frank, Obama, TARP and homeowner relief

Question for Brad DeLong and the Debt School of the Downturn: What Would Our Saving Rate Be If We Didn't Have Debt? by Dean Baker, Monday, 01 December 2014 05:32

via DeLong

David Dayen: Barney Frank Explains the Financial Crisis: “The TARP legislation included specific instructions to use a section of the funds to prevent foreclosures…

…Without that language, TARP would not have passed…. The Bush administration… used none of the first tranche on mortgage relief, nor did Treasury Secretary Henry Paulson use any leverage over firms receiving the money to persuade them to lower mortgage balances and prevent foreclosures. Frank made his anger clear over this ignoring of Congress’ intentions at a hearing with Paulson that November…. Frank writes, ‘Paulson agreed to include homeowner relief in his upcoming request for a second tranche of TARP funding. But there was one condition: He would only do it if the President-elect asked him to.’…

Obama rejected the request, saying ‘we have only one president at a time.’ Frank writes, ‘my frustrated response was that he had overstated the number of presidents currently on duty’…. Obama’s unwillingness to take responsibility before holding full authority doesn’t match other decisions made at that time. We know from David Axelrod’s book that the Obama transition did urge the Bush administration to provide TARP loans to GM and Chrysler…. It was OK to help auto companies prior to Inauguration Day, just not homeowners. In the end, the Obama transition wrote a letter promising to get to the foreclosure relief later, if Congress would only pass the second tranche of TARP funds. Congress fulfilled its obligation, and the Administration didn’t….

Frank… first leveled [this] in May 2012 in an interview with New York magazine. Nobody in the Obama Administration has ever denied the anecdote…. I suppose those reviewing ’Frank’ can offer an excuse about this being ‘old news’…. The political media’s allergy to policy is a clear culprit here. Jamie Kirchick’s blanket statement in his review of ‘Frank’ that ‘readers’ eyes will glaze over’ at the recounting of the financial crisis is a typical attitude. But… people [who] suffered needlessly for Wall Street’s sins… would perhaps be interested in understanding why…