Obama’s New Bailout for Banks…and Himself

On another West Coast swing, President Obama is doing his best to drum up support for his 2012 reelection campaign.  There are, after all, quite a few things the President has to worry about:

  • Growing concern over his militarist foreign policy – war and military action in Afghanistan, Libya, Iraq (which will not actually end in December, regardless of Obama’s claims), Uganda, Pakistan, and Yemen (where he has ordered the assassinations of 3 American citizens)
  • Approval ratings in the low 40% range
  • An economy on a continual downward spiral, with unemployment over 9% (the most generous stats) and a national debt of over $14 trillion
  • Growing discontent, including protests across the country, from Occupy Wall Street to the “New Media” (social media, blogs, and independent news sources)

Americans have seen through the “blame Bush” policy and are actually expecting Obama to take responsibility for his decisions and policies, which have included ramming through massive health care “reform” (yes, I laughed while typing “reform”), a bailout of the banks and federal programs that helped cause much of the economic collapse, and a stimulus package that failed to stimulate the economy.  His policies have been hugely unpopular and, by all standards, an utter failure.

Not only that, but Obama has broken nearly every campaign promise he made.  He promised to close Guantanamo Bay.  It is still open.  He promised to form transparent government.  He has not and now there is a Democratic push to seal his presidential record once out of office.

President Obama has supported the violation of American civil rights, in violation of the Constitution, like the extension of the PATRIOT Act, the disgusting practices of the TSA, and the removal of due process in the name of the “War on Terror.”

In the midst of these travesties, President Obama must take to the unenviable task of running for reelection.  So what is the President doing to pick up momentum and votes for his 2012 campaign?  More of the same.

Recently, Obama’s $447 billion “jobs bill” was soundly rejected by both Republicans and Democrats, with even the media attacking it quite fiercely (see here, here, here, and here for examples).  It was simply another stimulus package and not many see the logic in doing the same thing over and over, expecting different results.  In fact, that’s how Albert Einstein defined “insanity.”

But, insanity reigns.  Now, on a trip to Las Vegas, Obama has proposed what is essentially another bailout.  Of course, he is not calling it a “bailout.”  Words like “forgiveness” and “relief” sound far better – that is, student loan “forgiveness” and mortgage “relief.”

The plan for mortgage relief would allow homeowners to refinance their homes at lower rates even if they owe more than their homes are worth.  Of course, the plan only applies to those who obtained mortgages through Fannie Mae and Freddie Mac, that is, government mortgages.

In other words, the government forced banks to offer home loans that should not have been given through legislation like the Community Reinvestment Act and Clinton’s Homeownership Strategy.  People were given loans for homes they could not afford and (though this is a simplistic explanation) eventually the banks were bailed out to keep them from losing too much on the bad mortgages.  Now, they are being bailed out again, in the name of “mortgage relief.”

Obama will try to spin this as a benefit to homeowners, but it will only add to the national debt while allowing bad debt to linger in the housing market.  The government has no authority to make or back home loans in the first place and they certainly have no authority to bail out banks or homeowners when those loans default.  This is simply more interference in the free market and more big government intervention, designed to look like help, with the intention of garnering votes.

Coupled with the mortgage plan is Obama’s plan to relieve student debt.  The federal government has ensured that student loans would be more accessible and, if a student defaulted on a government-backed loan, the government could pursue action against the student for failure to pay.  Now, however, Obama is proposing a plan that would allow students to consolidate their debt into yet another government loan at a lower interest rate.

No doubt this is a nod to the “Occupy Wall Street” (OWS) protesters who have made student loan forgiveness a part of their battle cry.  In other words, it is a reelection ploy.

Of course, the OWS protesters have also targeted the bank bailouts with the cry of “Banks got bailed out, we got sold out.”  It will be interesting to see if bank bailouts are a bad idea when they benefit from it.

Essentially this student loan “forgiveness” will work like the TARP bailouts.  The government will provide a loan to the students, taking the bad student loan off the bank.  The student will then pay a lower payment and lower interest rate back to the government.  More to the point, American taxpayers will now be paying student loans.

Obama’s mortgage “relief” is relief for banks from bad loans.  His student loan “forgiveness” is forgiveness is for banks on bad loans.  And both of these measures will be secured by the government, which has no money of its own, and strong-armed the banks into such bad loans in the first place.

Such relief and forgiveness may benefit a few homeowners and students, but it will also saddle taxpayers with a greater burden and the likelihood of at least a trillion more dollars on the national debt.  But, for a lousy President running for reelection, what does he have to lose?

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One thought on “Obama’s New Bailout for Banks…and Himself

  1. Pingback: The Libertarian: Usurpation of Power on the Campaign Trail

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