It would have been useful to point out that the money that the government spends on a failed modification goes to banks, not homeowners. Typically, the government will have subsitituted an FHA insured mortgage for the original mortgage issued by a bank. This means that when a redefault takes place, the bank will have received most of the principle back on the loan, with the government incurring the loss on the redefault. The net result of this policy is that far more money is likely to be given to banks through the HAMP than to homeowners.That's Dean Baker pointing out that a NY Times article on the government's HAMP doesn't bother to mention that the people's money is being funneled to the banks and not the people.
Given TARP, given HAMP, given all the other "deals" the government is doing to funnel money to corporate America, I wonder how much longer the American taxpayer will be able to afford a "Government For the People, By the People". I'm guessing it shall perish from this earth, contrary to what good old Abe Lincoln claimed.
By the way...
Here's another observation by Dean Baker on the misdirected media in the US:
People Are Losing Their Homes and Their Jobs, But They Are Really Mad About the Deficit
by Dean Baker
That's effectively what the Washington Post told readers in another front page editorial highlighting the need for deficit reduction. The article said:
"But by suggesting the deficit may have peaked, administration officials are taking a political gamble. If the favorable number does not hold up in coming months and the budget shortfall surpasses the $1.4 trillion recorded last year, voters in the November midterm elections could punish the Democrats for offering false hope."
That's a great story. Is it plausible that even 1 percent of voters are going to have any clue as to whether this year's deficit is marginally higher or marginally lower than last year's deficit? Is there any reason that anyone should care? Is there any evidence that this will influence their vote in an environment where they are concerned about their jobs and their homes?
In the Post's dreams maybe, but not on this planet.