Obama As Hoover

Marketwatch sticks the "Hoover" stamp onto Obama:

WASHINGTON (MarketWatch) – As this venomous campaign cycle comes crashing to a welcome close, it seems that Republicans will gain control of the House for certain, narrowly hit or miss on the Senate and will be well-positioned in any case to further stymie President Barack Obama and regain the White House in 2012.

Beyond the election next week, however, it’s becoming apparent that Obama’s biggest opponent is not the GOP, but the economy. Putting it another way, Obama, through his fatally flawed choices of advisers and his blinkered attachment to obsolete economic thinking, is his own worst enemy.

Persistently high unemployment, an economy mired in a liquidity trap, and a possible resurgence of the housing and banking crisis in the wake of new disclosures about flawed and fraudulent foreclosures – all these could make Obama a one-term president

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The administration’s response – or non-response – to the brewing foreclosure crisis after a White House meeting last week is symptomatic of its profound failure to grasp the basic economic issues and could become the nail in Obama’s coffin.

Housing Secretary Shaun Donovan’s declaration after the meeting that the administration had found no evidence of “systemic” problems in foreclosure paperwork had the fingerprints of Treasury Secretary Timothy Geithner all over it. It is totally in keeping with Geithner’s consistent policy of parroting the line of the big banks and protecting their interests at all costs. See our report on Donovan’s comments.

The foreclosure crisis is just the latest manifestation of the mortgage boom and bust that spiraled into outright fraud before the bursting of the housing bubble brought the financial system to the brink of disaster. While the Bush and then the Obama administrations, along with the Federal Reserve, shored up the system to prevent its collapse, the government, under Geithner’s direction, refused to deal with the toxic assets at the root of the crisis.

Now these toxic assets have resurfaced with a vengeance. The same fraudulent paperwork at the heart of the foreclosure crisis also marks many of the original mortgages packaged into securities that investment banks sold to investors. Now some investors, including bond fund giant Pimco and the New York Federal Reserve itself, are demanding that Bank of America buy back the securities with these deficient mortgages. More investors will be emboldened to make similar claims against other banks. Read our story on the growing pressure on Bank of America.

The Financial Crisis Inquiry Commission is due to make its report later this year and it will include damaging testimony from third-party due diligence experts and others responsible for vetting these mortgages that the banks knowingly sold investors deficient mortgages without disclosing that fact. The panel’s chairman, Phil Angelides, told C-Span over the weekend that the mortgage securities were often “tragically deficient.”

In the meantime, the state attorneys general are investigating the foreclosure issues and will doubtless then be confronted with some of the evident fraud in the original mortgages. The housing finance crisis will be exposed for what it is.

“This is cancer,” Whalen, a former investment banker who co-founded consulting firm Institutional Risk Analytics, told Bloomberg TV. “It’s a slow, wasting process.” Read our story on Whalen’s speech to the American Enterprise Institute.

This toxic mortgage legacy could prolong the housing crisis, maintain or even increase unemployment, create a new banking crisis, and eventually tip the economy into that dreaded double dip recession. This is Obama’s Hoover scenario.

As this new-old crisis unfolds, it could confirm Geithner as the worst Treasury secretary in postwar history. It was Geithner who deflected the focus from toxic assets with his spurious “stress tests” for the banks that allowed them to pretend they weren’t insolvent and to return to business as usual. The weight of these toxic assets, unacknowledged or not, continued to block the resumption of credit that has torpedoed the economic recovery.

Geithner also designed the spectacularly unsuccessful Home Affordable Modification Program, ostensibly to help homeowners modify their mortgages but actually once again to provide the banks with political cover. The special inspector general for the program stigmatized it this week as doing more harm than good. Read our story.

Obama was unlucky in coming into office at this stage in the crisis, and he was unwise to rely on someone of Geithner’s dubious allegiances to handle – or mishandle – the biggest financial crisis since the Great Depression.

That crisis is not over. But from the looks of things, Obama’s presidency could well end after just one term. Not because of Republican obstructionism – and policies currently espoused by the GOP would be even worse – but due to his own fatally misguided economic policies.

Obama's presidency SHOULD be over.

He picked advisers who helped create this mess, have done nothing to mitigate it and indeed, have made things worse with their AIG bailouts and HAMP programs.

Nobody on Wall Street who caused this mess was held accountable.

Nobody in Washington who caused this mess was held unaccountable.

Teachers in Rhode Island, however, fired as part of Obama's Race to the Top program, were held accountable.

You can't make this stuff up.

Unemployment is heading back to double digits even as the administration looks to blame the jobless for their own unemployment and public school teachers for the crisis.

Banks are forclosing on people who don't even own mortgages, Wall Street is claiming banks and loan servicers don't need any paperwork or proof i order to foreclose on people.

And Obama is bragging about holding teachers accountable?

He cannot go away soon enough for me and I think the Marketwatch piece is correct that he will go down in history as a post-modern Hoover.

The one issue I take with the above column is the intelligence of Barack Obama.

I disagree that he is intelligent.

He is cunning, that is true - especially when it comes to succeeding at advancing his own career.

But smart, not so much.

A smart man wouldn't have chosen Geithner, Summers or Bernanke as his chief economic advisers.

He wouldn't have doubled down on health care even as unemployment was rising.

He wouldn't have sided with Wall Street and the hedge fund industry on financial reform even as they thumb their noses at him and call him "socialist" for daring to plug one or two regulatory holes.

He would have put people back to work with a jobs program that rebuilt American infrastructure and made this country workable, travel-able and great again.

Instead we got Race to the Top.

Instead we got fired teachers in Rhode Island and a White House that claims there us no foreclosure crisis.

Obama deserves to be fired and he deserves to be ignominiously associated with Herbert Hoover as one of the worst presidents this country has ever had.

Maybe even the top five.

Bush is on that list, but Obama better watch out.

He may Race to the Top of that ignominious list.