The Corner

Housing, Growth, and Politics

The president can’t bring himself to put politics aside, aid the housing-market recovery, and generate stronger economic growth. Odd for an administration supposedly laser-focused on jobs.

Today’s evidence comes from two important news items. Early reports are that after a full-court press by the administration, government officials are securing a $25 billion deal with five major banks — Ally Financial, Bank of America Corp., Citigroup, J.P. Morgan Chase, and Wells Fargo — to settle claims of abuse in the foreclosure process. The $25 billion consists of $5 billion in penalties and $20 billion in aid to homeowners who are underwater in their mortgages, but current on their payments. The five banks involved are responsible for roughly one-half of outstanding home loans.

Viewed in isolation, the pact represents an important step forward. The industry has the opportunity to put whatever abuses occurred in the rearview mirror, obtains a bit of legal certainty — at the price of the largest check since the tobacco settlement — and has improved incentives to move ahead in mortgage finance. 

The economy would ultimately benefit tremendously as the long-delayed workout of excess supplies can finally move forward. Once that adjustment has cleared, housing can resume its traditional role as a key cyclical industry in driving a more rapid pace of economic growth and improved payroll employment.

So far, so good.

Unfortunately, one can expect that the administration will not see it this way moving forward. Instead, it will portray the deal as a mere “downpayment,” emphasize that only 1 million homeowners will benefit, and argue that more help for underwater homeowners is needed.

That is inconsistent with putting things in the rearview mirror and getting on with a much-needed housing-market adjustment. And legal certainty is at risk as well, as at the same time the Securities and Exchange Commission has announced that it will sue many of the same banks over the sale of bonds linked to subprime mortgages during the crisis in 2007–08.

Two steps forward, one step back.

The macroeconomy is recovering, despite the hostile policy environment. It would benefit enormously from a stronger housing sector, an objective within reach if the administration could resist the political temptation to rouse its base with finger-pointing and lawsuits. Alas.

Most Popular

Elections

The Post-Election Madness Gets Worse

On the menu today: Two lawyers who aren’t formally on the president’s legal team but who keep filing lawsuits on his behalf tell Georgia Republicans to not vote in the Senate runoffs; Michael Flynn endorses a call for “limited martial law” and a “re-vote” of the presidential election; and the ... Read More
Elections

The Post-Election Madness Gets Worse

On the menu today: Two lawyers who aren’t formally on the president’s legal team but who keep filing lawsuits on his behalf tell Georgia Republicans to not vote in the Senate runoffs; Michael Flynn endorses a call for “limited martial law” and a “re-vote” of the presidential election; and the ... Read More
White House

Trump’s Disgraceful Endgame

President Trump said the other day that he’d leave office if he loses the vote of the Electoral College on December 14. This is not the kind of assurance presidents of the United States typically need to make, but it was noteworthy given Trump’s disgraceful conduct since losing his bid for reelection to ... Read More
White House

Trump’s Disgraceful Endgame

President Trump said the other day that he’d leave office if he loses the vote of the Electoral College on December 14. This is not the kind of assurance presidents of the United States typically need to make, but it was noteworthy given Trump’s disgraceful conduct since losing his bid for reelection to ... Read More

If You Like Your Police, You Can Keep Your Police

The most amusing thing about the Obama v. the Squad kerfuffle is that there is not actually an inch of substantive daylight between the supposed combatants. Former President Obama does not disagree with the sentiments or objectives of Ilhan Omar et al. He disagrees with their tactic of pursuing it through a ... Read More

If You Like Your Police, You Can Keep Your Police

The most amusing thing about the Obama v. the Squad kerfuffle is that there is not actually an inch of substantive daylight between the supposed combatants. Former President Obama does not disagree with the sentiments or objectives of Ilhan Omar et al. He disagrees with their tactic of pursuing it through a ... Read More
Film & TV

Wonder Drug Cures All Problems

I’ve just discovered a film that has changed my life. Give it a chance, and it’ll change yours, too. The film is Another Round, by the sly Dane Thomas Vinterberg (The Celebration), and it heralds the discovery of a miraculous substance by four friends, all of them high-school teachers in Denmark, on the ... Read More
Film & TV

Wonder Drug Cures All Problems

I’ve just discovered a film that has changed my life. Give it a chance, and it’ll change yours, too. The film is Another Round, by the sly Dane Thomas Vinterberg (The Celebration), and it heralds the discovery of a miraculous substance by four friends, all of them high-school teachers in Denmark, on the ... Read More