US bailouts failing to help most Americans
Syed Ali is the embodiment of the American dream. He came to America in 1997 with his wife and three daughters to find a better life. A few years later, his entire family became US citizens. Then, in 2006, he bought a home.
“We saw a lot of dreams of America and a good and better life here, better than my country,” said Ali.
Ali moved to the US from Pakistan and his three daughters are now in college.
In 2009, his company folded, he lost his job and missed three mortgage payments, payments he started making again after taking a job driving a cab.
Still, he received notice that his home will be foreclosed on September 10.
His is one of thousands of stories, exactly two years after Fannie Mae and Freddie Mac were bailed out by the US government.
“It’s very interesting. You look at these other banks that got bailed out. The private banks or even the automakers have gotten back on their feet. Fannie and Freddie have not gotten back on their feet,” said author and political columnist Tim Carney.
Carney also said the most disturbing part is that the role of Fannie Mae and Freddie Mac hasn’t been reduced.
“They’re still taking big checks from the government. They’re still losing hundreds of billions of dollars, or taxpayer dollars and they are actually increasing their role in the US housing market because they’re no longer concerned with making a profit,” Carney said.
The tab for the bailout of Fannie and Freddie has passed $148 billion and as the costs continue to grow, so do the benefits for big banks, from reducing the amount of cash held against bad debt.
Who are the benefactors? JP Morgan Chase, Wells Fargo, Citigroup and of course – Bank of America.
For Ali, he continues to navigate the road as best he can, despite a heavy burden growing even heavier.
Nomi Prins, the author of "It Takes a Pillage" and a senior fellow at Demos argued that new homeowners should be worried because little has been done to fix the system.
“Today’s the anniversary of the beginning of a multi-trillion dollar bailout. It was the first step of which was to basically buy stock in of Fannie Mae and Freddie Mac, it wasn’t to look into the actual mortgages and say you know what, there’s some money being lost here, people are being able to pay, they’re defaulting, foreclosures could come of that so let’s actually negotiate these loans at the individual level; help people, help the loans, help the entities to which we’re dumping multi-billions of dollars. And that didn’t happen."
"That sort of bottom level ground up type of approach to fixing or stabilizing the housing economy, and therefore the rest of the economy, never happened. There was always this sort of top-down approach and so what we’re left with two years level are Fannie Mae and Freddie Mac that continue to be in a crumbling state, banks that doing better but because they have had trillions of dollars dumped into them and they still have access to the Fed and everything else, should they have problems going forward, but individuals are left trying to figure out what their options are and those options haven’t become better,” said Prins.
She further argued that there is little to nothing being done to help the individual, there is a sever lack of organization and planning, making it difficult to get anything done.