Tag Archives: TARP

Media Pushing False GM Success Story to Reelect Obama

   ***In living memory of conservative truth-teller Andrew Breitbart who passed away last week at 43 years of age. Andrew dedicated his life to exposing the Liberal media complex, and their constant refusal to tell the truth, the whole truth and nothing but the truth. This one’s for you Andrew. Godspeed.***

President Obama has made the GM “success story” a huge part of his reelection campaign of 2012. This false narrative about General Motor’s “record profits” has been constantly inserted into the numerous campaign speeches and fundraisers Obama has been on recently, always under the guise of them being policy speeches. Another fact that needs to be reported, is that these “policy speeches” are nothing more than [taxpayer-funded] reelect Obama pep rallies and campaign tours. Doesn’t America have a legislative body known as the U.S. Congress that is supposed to stop the illegal usage of tax dollars for reelection campaign operations? Congress idly sits by and remains silent, while Americans are bombarded daily with reelect Barack Obama speeches largely paid for by the taxpayer, and parroted on national television by his pals in the media. Stop the nonsense Mr.President, and pay for your own reelection campaign tour.

As far as the recent media bombardment of television replays of Obama campaign speeches trumpeting him as the great savior behind General Motor’s [supposed] record profits of 2011, let’s not forget that it was G.W.Bush and the Democratically-controlled Congress of 2008 who started the big government graft package to the UAW, also known as the auto bailouts. Barack Obama simply took advantage of this already-in-place big government fraud to further enrich his bed-pals over at the UAW in exchange for their campaign support. The false claims about the GM success story of 2011 contains many fallacies, all of which are being pumped out daily by the Liberal media complex to enhance Barack Obama’s reelection image: (emphasis added)

First off we see the Detroit News claiming that GM retook the stage as world’s largest auto maker in 2011. It didn’t take long for this fairy tale to be debunked, as we see from Motor Trend Mag. and the CEO of Volkswagen:

Now Volkswagen is disputing the claims and suggesting that it bested GM last year. According to Automotive News, Volkswagen’s 8.16-million figure doesn’t include sales from commercial truck divisions MAN and Scania. Once those figures are added, it will significantly bolster VW’s annual sales tally.

On top of that, GM’s sales figure was padded with about one million sales by Chinese automakers SAIC Motor Corp. and Wuling Motors Co. — companies with which GM has joint ventures, but in which the American company does not have a controlling stake. If those sales were excluded and VW’s truck figures added, Volkswagen would probably steal the global sales crown from GM.

President Obama should have enough political advisers and speechwriters researching that already-discredited claim, one which he shouldn’t have made in the first place, let alone keep on the repeating that kind of tripe to bolster his image. Yet it makes Obama look good, so expect him to keep on parroting that myth here in 2012. Obviously, the truth does not matter to Obama and his political operatives in the media, especially when there is a reelection campaign to run.

Next we see that “Millions of jobs were created or saved”  due to the taxpayer graft and abuse more widely known as the auto bailouts, which we constantly hear Obama claim  in numerous campaign speeches. What about GM laying off 70% of its employees at a Detroit plant recently, all of whom had just came off an extended layoff posing as a “Christmas break?” Warren Beatty explains The Never Ending Chevy Volt Saga:

“General Motors (GM), or Government Motors, announced on Friday, March 2, 2012, that it will suspend Chevrolet Volt production for five weeks to “align production with demand.” GM told 1,300 employees at its Detroit Hamtramck production facility that they will be temporarily laid off from March 19 to April 23, as the company halts production of the Chevrolet Volt and its European counterpart, the Opel Ampera. The plant had resumed production on February 6, 2012, after a prolonged Christmas holiday shutdown.”

Not only has the UAW [that now controls GM] been voraciously feeding at the taxpayer-funded TARP-trough, GM has also sucked down millions of tax dollars through the D.O.E. green energy programs. The Chevy Volt scam should be filed under double-dipping taxpayer abuse 101, while also being cross-filed under massive-taxpayer-funded green-energy-failures, right next to the green-cars-for-the-rich-Obama-supporters file. Taxpayers were subsidizing the Chevy Volt fireball-waiting-to-happen junker at the rate of $7500.00 per unit sold in 2011. In Obama’s latest Chevy Volt scam, he has asked the taxpayers to pay for an even bigger subsidy for the Chevy Volt: A whopping $10,000.00 dollars a pop! ( in his latest proposed budget for 2013) The Obama media complex was on TV last weekend blaming the Chevy Volt failure on… wait for it… bad publicity. Yet yesterday, a GM spokesman and Obama-puppet announced that one of the reasons the Volt plant workers were laid off is to “retool” the plant, which includes improvements to rebuild the battery cooling system in the Volt to prevent people from being burned alive while in it, or having their homes burned down while charging it. Which lie are the people supposed to believe there?

GM made $9 billion in 2011; how much did they pay in their fair share taxes? ZERO. See this Harvard law School Forum paper, on how Obama’s favorite tax evasion felon, and current treasury secretary, Tim Geithner gave GM and the UAW a $45 billion dollar tax break, which results in them being exempt from paying their fair share of taxes for about a decade or longer. Take away GM’s taxpayer-funded subsidies and illegal tax exemptions, and lo and behold the great reelect Obama GM success story is proven to be more in line with Marxist propaganda designed to fool the masses, as opposed to any form of truth-telling and government transparency. When is the last time anyone [ if ever] saw the mainstream media report on GM’s illegal tax exemption of $45 billion?  The Liberal Media Complex refuses to tell the truth as far as the GM refusing to pay their fair share in taxes-driven success story goes, and this mandate comes right down from the White House to the media to protect Obama and enhance his reelection chances.

Finally, as American’s watch President Obamacontinue to boast about GM’s “record profits”, ( while paying zero taxes) we see this from Ed Morrissey: Great news: Le Bailoutte de Peugeot avec Le US Taxpayer Francs, in which we see that GM buying stock in another failing car company, Peugeot of France, and one which was reduced to junk bond status the day after the “purchase.”

So how did that work out?  About as well as you’d imagine.  As soon as GM had some cash, it decided to invest it — in another car company whose bonds had achieved le junk status:

Attention U.S. taxpayers:  You now own a piece of a French car company that is drowning in red ink.

That’s right.  In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen – a 7 percent stake in the company. …

Peugeot can undoubtedly use the cash.  Last year, Peugeot’s auto making division lost $123 million.  And on March 1 – just a day after the deal with GM was announced – Moody’s downgraded Peugeot’s credit rating to junk status with a negative outlook, citing “severe deterioration” of its finances.

In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.

What really proves the point that the mainstream media is promoting the reelection of Barack Obama through parroting the phony GM success story, is the fact that exactly zero major news networks have reported on GM’s recent purchase of 7% of Peugeot, and the subsequent downgrade to junk bond status the day after GM pumped $400 million bucks into the company.  ABC did report one troubling aspect of Government Motors purchasing another in-the-red car company, which is quite telling on it’s own:

ABC’s Jonathan Karl notes that while GM bought a big stake in Peugeot, the Peugeot family had an opportunity to buy a stake in GM.  They passed on that “opportunity,” which just proves that the Peugeot family is smarter than GM.

And Barack Obama is betting that America will be gullible enough to believe his media operatives fairy tale narrative on the great GM Success Story of 2012, and reward him with four more years in office, and to prove how well the Liberal media complex has sold this GM success-charade to the masses. As  the uber-courageous truth-teller and unabashed conservative, Andrew Breitbart would ask America: “Who are you going to believe when you go to the polls in 2012 to pick the next President of the United States, the Liberal media complex… or the truth contained herein concerning the big GM success lie of 2012?

 

 

 

 

 

 

 

 

 

 

 

 

Solyndra-Style DOE Loan Report Released

The Obama administration was caught red-handed giving a half-billion, taxpayer-funded green energy loan to a [now bankrupt] green energy company in what is now known as the Solyndra  pay-for-play scandal. While the media downplayed the event, thanks to citizen reporting and social media programs on the Internet, most concerned citizens are now aware of how the Obama administration and the DOE have been using Solyndra-style green energy loans to fill Democrat’s campaign coffers at taxpayer expense.

To add insult to injury, Solyndra employees were caught by a news crew effectively throwing away more taxpayer dollars, as can be seen here. As the public outcry about this taxpayer abuse became louder, Congress started holding hearings about just what went down at Solyndra. So what’s the White House to do under such scrutiny? They hire the former treasury official, Mr. Herb Allison, the former Treasury official who oversaw the TARP [fraud] program to spin up a “report” to try to paint the Solyndra scandal in a good light. This is nothing more than propaganda 101 folks, designed to sweep the Solyndra scandal under the rug. Nothing to see here folks, just move along.

The recently released, ” W/H ‘Independent’ Report on DOE Loans” can be read in it’s entirety here.  While the White House relies on the keywords “independent” and “outsider” in an attempt to make it appear as if this report was done by someone with no DC connections, as noted above it was, in fact, done by the former TARP overseer Mr. Allison. That would be the very same TARP program in which there was very little transparency in spending almost a trillion dollars of the people’s money, which has left most people wondering just where all that money went today.  In a quick response to the release of this report, Rep. James Sensenbrenner Jr. (R-Wis.) stated, “This is less a report than an umbrella to deflect the criticism that’s pouring down on the Administration,” In other words, file this report under the Obama-propaganda 101 category.

The Hill came out with an article on the DOE Energy Loan report that has some interesting factoids about this report: (emphasis added)

An outside review of the Energy Department’s embattled green energy loan program calls for several steps to improve oversight but also provides lower estimates of taxpayer risk than an earlier federal forecast.

The “reduced risk” to taxpayers odds of losing their hard-earned dollars, according to this report, has now went down from an estimated $5 billion dollars to a new and revised number of $3 billion tax dollars being put at rick of loss. Color the taxpayers happy and break out the champagne! Does that “reduced figure” of $3 billion lost taxpayer dollars contain the previously lost billions in several bankrupt green energy scams , including  Solyndra? No it doesn’t, and the Obama administration wants the citizenry to forget the lost/stolen/wasted, half a billion tax dollars for the Solyndra pay-for-play scandal, just like they are stonewalling Congressional investigations, lying and trying to cover up the Fast and Furious gunrunning scandal that got Brian Terry and thousands of other folks murdered by assault weapons sold by our very own government!

What is also a semi-hidden mind-massage that is being sent to Congress by this report, is that big government needs to get bigger.  Again this is in reference to The Hill article that states: “The report calls on the department to name a “Chief Risk Officer” who would head up a “Risk Management unit” charged with monitoring the loans.” A New Chief officer is now needed to head up a new risk management unit, all on the taxpayer dime because the current incompetents could not properly do their jobs in protecting the people from the taxpayer abuse described above.  Here is a serious hat tip: If the DOE is so incompetent that it can not properly protect the taxpayer from fraud and abuse, while doling out hundreds of billions of tax dollars, then abolish the whole frigging department immediately!

In summary, the recently-released so-called “W/H independent, outsider report is a bunch of bunk put out to allow the current administration to continue using the DOE green energy loan program as a reelect Barack Obama campaign and democrats slush fund, period. Let’s hope Congress is listening to this and takes action to stop any further green energy funding fraud that is designed to reelect Barack Obama and company. That must include no tax dollars to fund the new DOE loans Chief Risk Officer and his bureaucratic big government unit that this propaganda piece posing as an “independent report” is plotting towards starting.

 

 

 

Obama’s Class Mate Speaks Out!

An email that went viral back in June of 2010 is now making a comeback as we head into the 2012 Presidential elections. In that email we see Mr. Wayne Allyn Root, a college classmate of Obama’s, stating some very strong opinions about just who Barack Hussein Obama really is, his religious beliefs, and his overall ideological agenda. The only changes made to the entire email are formatting and sentence structure, while word for word it is kept  intact. – D.J. Redman

OBAMA’S COLLEGE CLASSMATE SPEAKS     OUT By Wayne Allyn Root , June 6th,     2010

 

 

 

 

 

Barack Hussien Obama is no fool.  He is not incompetent. To the contrary, he is brilliant.  He knows exactly what he’s doing. He is purposely overwhelming the U.S. Economy to create systemic     failure. Economic crisis and social chaos — thereby destroying capitalism and Our country from within. Barack Hussien Obama was my college classmate.  ( Columbia University , class of ’83). He is a devout Muslim do not be fooled. Look at his Czars…anti-business..anti- American. As Glenn Beck correctly predicted from day one!  Barack Hussien Obama is     following the plan of Cloward &Piven, two professors at Columbia University .. They outlined a plan to socialize America by overwhelming the system. With government spending and entitlement demands. Add up the clues below. Taken individually they’re alarming. Taken as a whole, it is a brilliant, Machiavellian game plan to turn the United States into a socialist/Marxist state with a permanent majority, That desperately needs government for survival … and can be counted on to always vote for bigger government. Why not? They have no responsibility to pay for it.
Universal Health Care .  The health care bill had very little to do with health care. It had everything  to do with unionizing millions of hospital and health care workers, as well as adding 15,000 to 20,000 new IRS agents (who will join government employee unions). Obama doesn’t care  that giving free health care to 30 million Americans will add  trillions to the national debt.  What he does care about is     that it cements the dependence of those 30 million voters to Democrats and big government. Who, but a socialist revolutionary would pass this reckless spending bill in the middle of a depression?

Cap &Trade.  Like health care legislation having nothing to do with health care, Cap &Trade has nothing to do with global warming. It has everything to do with redistribution of income,  with government in control of the economy and a criminal payoff to Obama’s biggest     contributors. Those powerful and wealthy unions and contributors (like GE, which owns NBC, MSNBC and CNBC) can then be counted on to support everything Obama wants. They will kick-back hundreds of millions of dollars in contributions to Obama and the Democratic Party to keep them in power.  The bonus is that all the new taxes on Americans with bigger cars, bigger homes and businesses helps Obama “spread the wealth around.”

Make Puerto Rico a state. Why?  Who’s asking for a 51st state? Who’s asking for  millions of new welfare recipients and government entitlement addicts in the middle of a depression? Certainly not American taxpayers. But this has been Barack Hussien Obama’s plan all along. His goal is to add two new Democrat senators, five Democrat congressman and a million loyal Democratic voters who are dependent on big government.
Legalize 12 million illegal Mexican immigrants. Just giving these 12 million potential new citizens free health care alone could overwhelm the system and bankrupt     America . But it adds 12 million reliable new Democrat voters who can be counted on to support big government.  Add another few trillion dollars in welfare, aid to dependent children, food stamps, free medical, education, tax credits for the poor, and eventually Social Security.    

Stimulus and bailouts. Where did all that money go? It went to Democrat contributors, organizations (ACORN), and unions — including billions of dollars to save or create jobs of government employees across the country.  It went to save GM and Chrysler so that their employees could keep paying union dues. It went to AIG so that Goldman Sachs could be bailed out (after giving Obama almost $1 million in contributions). A staggering $125 billion went to teachers (thereby protecting their union dues). All those public employees  (unions) will vote loyally Democrat to protect their bloated salaries and pensions that are bankrupting America.

The country goes broke, future generations face a bleak future, but Obama, the Democrat Party, government, and the unions grow more powerful. The ends justify the  means. 

Raise taxes on small business owners, high-income earners, and job creators. Put the entire burden on only the top 20 percent of taxpayers, redistribute the income, punish success, and reward those who did nothing to deserve it (except vote for Obama).

Reagan wanted to dramatically cut taxes in order to starve the government.  Barack Obama wants to dramatically raise taxes to starve his political opposition. With the acts outlined above, Barack Hussien Obama and his regime have created a vast and rapidly expanding constituency of voters dependent on big government; a vast privileged class of public employees (unions ) who work for big government; and a government dedicated to destroying capitalism and installing themselves as socialist rulers by overwhelming the system.  Add it up and you’ve got the perfect Marxist scheme — all devised by my Columbia University college classmate Barack Hussien Obama using the Cloward and Piven Plan.  Note:  This letter was “Correctly attributed” says snopes! http://www.snopes.com/politics/soapbox/overwhelm.asp .

America can choose to bury her head in the sand and stand by doing nothing to stop the Socio-Marxist plan to finish her off as we know her… or she can stand up and fight against the reelection of Barack Obama in 2012. The time is now. Get active, spread information like this to everyone you know. America’s future propserity and freedom depends upon it!

Dealing With the Occupations

I’ve heard a few libertarians who get a little bit defensive of how the Occupy Wall Street movement is treated, and for a while I wondered why that was. Every conservative I know has been very critical for obvious and good reasons. As a conservative libertarian, I usually reserve judgment, but as usual I fall somewhere in the middle of both ideologies. I’m personally disgusted by the overwhelming majority of the people at the “occupations”, their behavior, their political ideologies and solutions. The question I ponder is, “Is there a silver lining to the Occupy Wall Street movement? And what good can come from it?”

Before the Marxist elements became more obvious and widespread at the Occupy Wall Street movement, much of their disdain appeared to be aimed TARP and to a lesser extent, the Federal Reserve. Those are two areas of agreement conservatives have in common with them. This also means I have more in common with Occupy Wall Street radicals than I do with mainstream Democrats like Harry Reid and company. Occupy Wall Street seems to oppose the Wars in Iraq and Afghanistan, I too think its way past time for them to end. Democrats have only paid lip service in their supposed opposition to the wars, which is why they didn’t end them when they had total control from January 2009 to January 2011. To be clear, there’s many more areas we disagree on, like their desire to “eat the rich”, forgive all debt, and enact a $20.00 minimum wage. Those are all insanely awful ideas, and while I think most Democrats agree that those are bad ideas, they probably all sympathize with the proposals to varying degrees and would like to move in those policy directions. But even if Occupy Wall Street opposes bailouts because they don’t believe there should be a private sector, if they oppose the Federal Reserve because they’d rather use the barter system instead of using currency, and if they oppose the wars because that they believe that money could be better spent on running petting zoos; their reasoning doesn’t really matter to me. The important thing is that we’d both vote against bailouts, against the Federal Reserve, and to end the current wars.

I was reading a 2011 Heritage Foundation guide that ranked all members of the House and Senate in terms of their conservatism. In the Senate, most Democrats had anywhere from 5%-0%, but Bernie Sanders, the admitted socialist from Vermont had a 14% rating, the highest by far of anyone on the left! That is shocking to most, but not to me. Bernie Sanders is without a doubt an absolute crazy leftist. But, Bernie Sanders introduced the “Audit the Fed” Bill in 2009 that was co-sponsored by ultra conservative senator Jim Demint. Someone who is also like Bernie Sanders in that regard is Ohio Congressman Dennis Kucinich. Kucinich is another far leftist, but he actually voted against Cap N Trade (because it didn’t go far enough), wants to impeach Obama over his violation of the War Powers Act and assassination of an American citizen (be it a very bad one), and opposes the Patriot Act. Regardless of Kucinich’s reasons, I’m totally with him on those agendas. Policy wise and to a lesser extent, principle-wise, there may be more common ground between the far left and the right.

Establishment Democrats are the absolute worst. Joe Lieberman is many republicans’ favorite democrat. I admire that he has principles, which is unusual for politicians in general, but that’s as far as my admiration goes. Lieberman has a neoconservative foreign policy and is a socialist domestically. What that means is that he is as bad as Barack Obama in terms of spending, if not worse. Speaking of terrible things, Democrats usually say and do whatever they need to, to get re-elected. I’m sure some Democrats are unaware of the harmful effects of their policies and have benevolence in mind. But most are interested in buying votes from every group they can possibly get a hold of. Democrats usually run against things, namely republicans. They will oppose republicans virtually on every policy, not because they necessarily disagree, but as a political tactic. This is beyond obvious when Democrats are in power and their foreign policy is seen by the American people. The only difference between Bush and Obama on foreign policy is that Obama wants Israel to return to its 1967 borders and that he likes to travel to countries and apologize for things America did 50-75 years ago.

Occupy Wall Street could be dangerous in the future. As winter weather comes in for the long haul, it seems the movement would face 2 options, it either dies out or revs up by becoming violent and [even more] lawless. Obviously we should hope that its the former. The latter would bring about the chaos and destruction that we see taking place in crumbling nations like Greece. Most rational people probably look at Occupy Wall Street as disgusting and view it negatively. I don’t see how the Democrats channel the movement into electoral success (by attracting new voters, they have the Occupy Wall Street vote pretty well in hand). The truly sad part of it is that it had some limited potential.

Instead of just voting a straight democrat ticket, a democrat tea party would’ve brought about positive changes for the country. Voting out all the crony capitalist Democrats as well as the ones supporting destructive entities like the Federal Reserve would be fantastic (but painstaking, as that would require replacing most of the ones currently serving). However its likely that the individuals who are currently occupying places are too lazy to bring about such productive change and to do in depth research on the policies that are actually causing the problems they are facing. As Reason Magazine’s Matt Welch pointed out, one of the great aspects of the Tea Party is that they are principled enough to vote for a candidate who they agree with on most policies but who is also a crazy who only dresses in a bunny suit (who obviously has no chance of winning), instead of supporting a worthless establishment republican who could easily win in the general election. Unfortunately, with far left nuts such as Michael Moore, Van Jones, and Cornel West in their ranks and financial support coming from the labor unions, Occupy Wall Street has insured itself as a worthless group of nasty, unemployed, angst filled useful idiots willing to take direction from absolute crazies or the people who promote many of the policies they say they oppose. Instead of a good policy or personnel reform coming from the Occupy Wall Street movement, the only silver lining may be independent voters running even further away from the democrat party.

GAO:TARP Has Done Two Things, “Jack and Squat”

In the GoverGAO Logonment Accounting Office’s October “Report to Congressional Committees” on TARP, it is apparent that TARP’s success.. isn’t that apparent.

The report recommends filling important positions with permanent staff instead of the consultants currently manning them, but what really stands out is when the GAO attempts to quantify the success of the program.  The report states that, “isolating and estimating the effect of TARP programs remains a challenging endeavor… and that a number of anticipated effects of TARP have not materialized”. Billions of dollars of taxpayer money and not only can’t we estimate any effects, the GAO flat out says that the positive effects we expected.. never happened.
The report goes on to show that TARP is seemingly operating with little oversight, no transparency, and next-to-zero measurements of it’s success or failures.  This sounds eerily like cash-for-clunkers where dealers were unable to get rebate money due to an understaffed and disorganized government program.

Almost $364 Billion has been disbursed to financial agencies and those agencies aren’t using the money to make more loans, their shoring up their financials and buy their warrants back from the government.  Surprise, I know.  From that money, the government has receives a little over $9.2 Billion in dividend and other securities payments.  Unfortunately, since the Treasury had to borrow the money (deficit spending) to give it to the financial institutions and that borrowed money is funded by Treasury instruments that the government pays interest on, no one can figure out if any of that $9 Billion was a profit, a loss or a wash.

Just wait until health care is funded, implemented and measured this way.  We’ll hate it, not know how much it costs, and have no clue how to fix it..  just like TARP.

Administration Says Its Saving Homes, Oversight Report Says Otherwise

The Congressional Oversight Panel published a report on October 9th assessing the effectiveness of “foreclosure mitigation efforts” for the previous six months.  Many in the media are focusing on how the administration’s foreclosure efforts are failing.  Just reading the executive summary, I was just as troubled by who these efforts are failing.  The first paragraph grabs the attention with, “The combination of federal efforts to combat the financial crisis coupled with mortgage assistance programs makes the taxpayer the ultimate guarantor of a large portion of home mortgages“.  Congratulations, even though you and I knew better than to get into real-estate investing during an obvious bubble.. the government forced us into it and we’re about to take a bath.

On a positive note, the executive summary does say that it is likely that the benefits will eventually outweigh the costs to the taxpayer.  The initiative that is expected to bring about these benefits is Making Homes Affordable (MHA) which is made up of two programs – the Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP).  HARP focuses on homeowners that are in-good-standing on their home loans but the mortgages are valued higher than the actual value of the home.  HAMP focuses on those that can no-longer afford their mortgages and keeping them out of foreclosure.

HARP reconfigures the loans into stable, affordable loans and has performed almost 96,000 mortgage reconfigurations or refinances.  It is difficult to prove a negative, just as with the “jobs saved or created” angle the administration takes on the stimulus plan.  Here we have another.  Did we actually prevent any foreclosures or just guarantee a more-favorable loan for people that bought too much house?  The report does not even try to compute how many homes loans were saved or prevented from being bad.  Probably because it can’t be done.

HAMP subsidizes the mortgage payments of soon-to-be-foreclosed debtors with taxpayer dollars.  This mortgage modification program reconfigured 1,711 mortgages and put another 362,348 other borrowers into a 3-month trial program.  The U.S. Treasury expects that it will spend almost $43 billion of the $50 billion TARP funds for mortgage modification.  This amount would support about two-and-a-half million loan modifications.  Unfortunately, current estimates are for closer to 12 million foreclosures will occur which means that, “the remaining losses will be massive”.

The report stresses three main reason why these favored programs of the Obama administration may not succeed.  Size, Scope and permanence.

First, the scope of the program will limit it from helping the most-at-risk mortgages.  The eligibility requirements will not allow adjustable rate mortgages or interest-only loans to be subsidized by taxpayer money.  HAMP is also not designed to help with non-payment of mortgages due to unemployment – the main reason for many home-losses in these economic times.  The whole program is built around fixing subprime mortgages, and even the report states that it’s so “six-month-ago”.  Nothing in this bill deals with the actual mortgage crisis that Americans are dealing with.

After scope, the report explains how the size of the program is also insufficient.  Foreclosure starts are coming twice as fast as HAMP modifications and many homeowners that would qualify for the program are losing their houses while waiting for the program to catch up.  This is similar to the cash-for-clunkers issue of too many promises for too little capability.  The car dealers could decide to stop accepting deals under that program to avoid cash-flow disasters.  These homeowner’s only choice is to lose their homes.  Even once the program catches up, it will only be able to service 50% of the Treasuries own estimate for home foreclosures.

Lastly, the Congressional Oversight Panel’s report addresses permanence.  Will these modifications actually result in the prevention of a home loss?  Only a small portion of the modifications done under HAMP have resulted in permanent stable mortgages.  The panel suggests that after massive infusions of taxpayer capital, these loans default anyway.  The report states that real results of these programs will be, “that foreclosure is delayed, not avoided”.

There is some discussion of negative-equity.  If the housing market continues depressing or deflating, more people may consider walking away from their mortgages as there would be no inherent value in the home.  These wealth-lost scenarios could increase foreclosures well-beyond even the pessimistic estimates of the U.S. Treasury.  If this is added into what the report calls “payment reset shock”, due to high loan-to-value adjustable loans, it’s obvious the government has no-chance at making any real dent in the real-estate crisis.

What the report doesn’t consider is the massive de-leveraging that is occurring in the American economy.  In the Conservative Daily News article entitled, “Going Galt Without Realizing“, it is apparent that between the government’s willingness to create money for these mortgage-subsidization programs and American’s lack of willingness to continue borrowing to consume, our fractional reserve systems could add another last straw.  Bank reserves will dwindle as fewer and fewer Americans borrow for homes and autos either because they can’t (due to recent foreclosure or a barely-affordable mortgage) or because this crisis has caused a change-in-behavior towards reduced indebtedness.

Whether we look back at cash-for-clunkers or at this initiative, it becomes obvious that the administration is unable to judge the size, scope, permanence or effectiveness of the programs it supports.