BLOG VIEW: I am a big fan of political street theater. I don't really care what the issue is or what kind of philosophical slant is being promoted – I believe that the display of intelligent people making their voices heard in public assembly is a wonderful affirmation of the basic tenets of this nation's democratic principles.
However, not everyone is an expert in organizing a successful political demonstration. Case in point: the ‘Occupy Wall Street’ happening in New York City's financial district. The goals of this demonstration's organizers are more than a little naive – one of their requests is for President Obama to create a commission that will investigate and halt ‘the influence money has over our representatives in Washington’ – and the mainstream media coverage of their protests has been perfunctory (except for a couple of raucous flare-ups when the NYPD was extra rough in arresting protestors).
It is a shame that the champions of contemporary political street theater, the Tea Party movement, did not join in the ‘Occupy Wall Street’ happening. After all, the crux of the protest – the use of taxpayer money to float the world's largest financial institutions – seems right up their alley. And if anyone can grab the media's attention, it is the Tea Party.
But the Tea Party has been strangely silent lately on the national issues involving the financial services world – particularly in regard to the sluggish pace of housing finance reform and the growing price tag for failed federal loan modification programs. That's strange, considering this is a situation that is (pardon the expression) sugar in their tea.
Even Obama openly acknowledged that his housing policies had fallen short. In his recent Twitter-sponsored town-hall meeting, the president glumly stated that he was ‘going back to the drawing board’ on the federal loan modification programs. This means billions of taxpayer dollars more being poured into a federal endeavor that has no track record of measurable success – clearly that situation would get the Tea Party movement boiling. (Okay, that's the last tea-related pun today!)
The problem is that the Tea Party – along with the Republican politicians that are desperate to win their support – have never presented a sturdy solution to the problems facing the housing market. After all, voicing support for the financial services giants that are servicing the distressed loans would give the impression of favoring Wall Street over Main Street.
Furthermore, the Tea Party often seems more interested in the issues that enable an easy-breezy pro/co spin. For example, no one wants to see their taxes raised (except for Warren Buffett), and everyone wants to lower their medical bills – thus the simplicity of Tea Party rallies opposing tax increases and the Obama healthcare reform. These protests can be easily encapsulated on placards and banners and in speeches heavy with pithy sound bites. But on housing finance-related issues, such as the multibillion-dollar failure of the Home Affordable Modification Program (HAMP) and the administration's plans to sink more taxpayer money into this unsuccessful endeavor, the Tea Party movement is at a loss for words.
But it is not difficult to explain the problem quickly and easily. In MortgageOrb's recent special report, ‘The Fall And Rise Of The Housing Market,’ the folly of the federal loan modification efforts was cogently explained by Buck Hawkins, residential president of the California Mortgage Bankers Association and senior vice president of capital markets at Los Angeles-based Castle & Cooke Mortgage LLC.
‘Sixty percent of all loans that are modified go into default again within the next eight months,’ Hawkins says. ‘It is ultimately a question of what the borrower can still afford. The bottom line is that we've gotten away from the tenets of mortgage lending: the borrower's ability to pay and ability to repay.’
Also cited in the report were comments by Dr. Anthony B. Sanders, distinguished professor of real estate finance at George Mason University in Fairfax, Va., on whether the federal government ever had a handle on the crisis.
‘I always had the feeling that the federal government wasn't serious about modifying loans,’ he says. ‘The size of the negative-equity problem and rising unemployment were known to the Obama administration from the beginning, when they implemented HAMP. Households were on their way to losing $7 trillion in home equity, and HAMP's budget was $75 billion. HAMP represented trying to stop a tsunami with a one-foot seawall.’
In the language of political simplification, these subjects can be whittled down fairly easily: The federal government is mucking up the housing market, and Americans are getting stuck with the bill. Hey, you can't get an easier sound bite than that!
Hopefully, the Tea Party rally organizers will start to pay some more attention to this subject. And, for that matter, all Americans need to start showing more interest. In today's dangerously stagnant economy, we need ideas that work – and the continuation of failed and expensive federal policies is a good reason for a political street theater protest by voters of any political persuasion.
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
