Barack Obama

Economists: White House Mortgage Plan Is A Good, But Modest, Plan

Brian Beutler | October 24, 2011, 3:49PM

President Barack Obama

"We Can't Wait" is the White House's new economic rallying cry. With Senate Republicans committed to filibustering President Obama's jobs bills, and House Republicans refusing to hold votes on them, the administration is taking some steps that don't require Congress to act.

The most significant of these, announced Monday, will allow people with underwater mortgages to refinance at favorable rates if their mortgages are backed by Fannie Mae or Freddie Mac. It will expand the existing Home Affordable Refinancing Program to all underwater homeowners, leaving people with more money in their accounts every month, and thus, as David Dayen has pointed out, functioning as a de facto stimulus.

Will it move the needle on unemployment though? It depends on whom you ask, but the broad view seems to be it won't on its own fix the ailing economy. But it is expected to jack up the number of mortgage refinancings.

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S&P

Experts Question Ratings After S&P Gives Subprime Bonds Higher Rating Than U.S. Debt

Brian Beutler | September 2, 2011, 5:18PM

Influential investors are scratching their heads over a little-noticed development: After downgrading the country's credit rating, Standard & Poors is continuing to award AAA status to the same class of assets that nearly blew up the world economy three years ago.

From Bloomberg: "S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties."

In other words: U.S. Treasuries -- widely believed to be the safest investment in the world -- don't make the cut, but subprime mortgage investments do? What gives?

Subprime mortgage-backed securities are the same class of assets that fueled the housing bubble and triggered the 2008 financial crisis. According to a 2010 report by the Senate Permanent Subcommittee on Investigations, the main ratings agencies fell over themselves to give these bonds AAA ratings, then abruptly downgraded them to junk status after mass mortgage delinquencies made maintaining the false ratings untenable.

According to the subcommittee's report, "In the end, over 90% of the AAA ratings given to mortgage-backed securities in 2006 and 2007 were downgraded to junk status, including 75 out of 75 AAA-rated Long Beach securities issued in 2006. When sound credit ratings conflicted with collecting profitable fees, credit rating agencies chose the fees." This triggered a collapse in mortgage-related securities leading to trillions of dollars in investor losses and a credit freeze that contributed to -- some contend caused -- the financial crisis.

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Stimulus

Republicans Falsely Claim Obama Advisers Burying Data 'Proving' Stimulus Is Hurting Economy

Brian Beutler | July 5, 2011, 2:51PM

House Speaker John Boehner (R-OH)

Republicans are citing data from President Obama's Counsel of Economic Advisers to argue that the stimulus has cost the economy nearly 300,000 jobs in the past few months.

The claim originated Sunday at the conservative Weekly Standard and has quickly mushroomed into a talking point: It's been cited already by both Douglas Holtz-Eakin -- an influential Republican economist -- and House Speaker John Boehner. And it supposedly explains why the White House unveiled the report on the Friday before a holiday weekend.

There's just one problem: it's false.

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Debt

Republicans Find A Tax Cut They Don't Like -- One That Helps Obama

Brian Beutler | June 29, 2011, 5:50AM

Sen. Jon Kyl (R-AZ)

Let's assume Democrats and Republicans team up in the next few weeks to pass a very GOP friendly debt reduction bill. And let's stipulate, too, that, as in Britain and elsewhere, the spending-cut magic doesn't do anything to help the unemployment crisis, leaving President Obama and the Democrats a huge political liability -- and national problem -- they won't be able to resolve by election time in November.

[TPM SLIDESHOW: Battle Over The Budget: Behind The Scenes At The White House]

This is why they're trying to squeeze something -- anything -- into the debt ceiling package that will provide near-term stimulus, to improve the jobs situation or at least counteract the austerity measures. Unfortunately, Republicans have foreclosed on the highest-impact ideas economists have recommended -- aid to states, infrastructure investment, and other direct spending projects.

So they've settled on a fourth- or fifth-best option: a plan to provide employees deeper, temporary relief from the payroll tax, and extend that relief to employers as well. It's not the most stimulative thing in the world -- but it is a tax cut for business owners, so at the very least it should have some buy-in on the right, no?

You might think so, but you'd be wrong.

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Debt Ceiling

Top Economist: Even Brief Default Will Cause New Recession And Blow Recovery 'Out Of The Water'

Brian Beutler | June 28, 2011, 11:39AM

Moody's Analytics chief economist Mark Zandi

How big are the stakes on Capitol Hill right now? According to one of the most influential economists in federal policy making, the next four weeks will make the difference between a slow glide toward economic recovery, and a severe tumble into a new recession.

[TPM SLIDESHOW: More Than Just Forms: Tax Day Tea Party-Style]

Moody's chief economist, and former McCain economic adviser Mark Zandi is forecasting GDP growth of 4 percent by the end of the year and into next. But in response to a question from TPM, he told reporters at a breakfast meeting hosted by the Christian Science Monitor that his forecast would be "blown out of the water," if Congress fails to "reasonably gracefully" raise the national borrowing limit.

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