In today’s Washington Examiner editorial, we write:
Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, has published a new book, “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” It presents a damning indictment of the Obama administration’s execution of the TARP program generally, and of HAMP in particular.
By delaying millions of foreclosures, HAMP gave bailed-out banks more time to absorb housing-related losses while other parts of Obama’s bailout plan repaired holes in the banks’ balance sheets. According to Barofsky, Treasury Secretary Tim Geithner even had a term for it. HAMP borrowers would “foam the runway” for the distressed banks looking for a safe landing. It is nice to know what Geithner really thinks of those Americans who were busy losing their homes in hard times.
Barofsky repeated the story on Morning Joe today:
Some of the other goals that Congress insisted so that TARP could get passed, things about preserving home ownership and helping deal with the foreclosure crisis, promsies that were made by Treasury that were later abandoned. You have a housing program that was supposed to spend $50 billion to help struggling homeowners. And as I detail in the book, Geithner admitted to us that it was really more about, in his words, “foaming the runway” for the banks. And the resuly? A program that to date has spent around 3 of the 50 billion dollars.
What he said was that the banks could handle a certain number of million of foreclosures over a certain period of time and any more than taht would put them in jeopardy, and this program would help “foam the runway,” help stretch out the foreclosure crisis. And that’s why more money has been spent, more TARP money went to American Express, a credit card company, than went to help all the struggling homeowners.
The HAMP bait-and-switch that Geithner organized inflicted real pain on real Americans. Our editorial recounts:
The most disturbing parts of Barofsky’s book are stories of Americans who were made worse off by Obama’s bailouts. One California business owner who could have sold his house at a loss, but maintained some savings and his credit history, was enticed into a HAMP trial modification that was supposed to cut his payment in half. Instead, thanks to HAMP, he lost his house, his savings, his credit and his business.
Keep all this in mind while Obama prattles on about how Romney’s policies will benefit the rich at the expense of the middle class.