Michael Olenick: The Real Origins of Trump – The Foreclosure Crisis
Yves here. If you didn’t have a chance to watch the recent Frank Luntz interview on Frontline, which Lambert featured in Water Cooler the week before last, please see the section from 10:35 to 12:30. Here Luntz focuses on how the Obama bailouts favored the rich and hung pretty much everyone else out to dry. Luntz discusses how he had meaningful numbers of people breaking down in tears in his focus groups over foreclosure. This was a plague-level crisis in many communities in America that the press has chosen to pretend never happened. No wonder they are mystified as to why Trump won.
By Michael Olenick, a research fellow at INSEAD whose recent articles can be read at at innowiki.org
With the election coming up, I thought it’d be a good time to remind why some people voted for Trump in 2016, especially those who switched their vote from Obama to Trump.
As a quick reminder, Obama ran on and promised “Hope & Change” then, in the middle of the financial crisis, offered no hope and didn’t change much at all. He blamed some of it, rightfully, on Republican obstruction but the fact is he just wasn’t willing to rock the boat: he just didn’t try hard enough.
The TARP bank bailout program promised help to homeowners, including a budget allocation specifically for that purpose. Despite the program only passed because of those provisions they were largely ignored.
Bailout King Timothy Geithner was put in charge of Treasury where he referred to struggling homeowners facing homelessness as “foam” on a runway. Reports are he felt bad for struggling Manhattanite bankers who faced the loss of their jobs and repeatedly lied that the goals of Wall Street and Main Street were aligned when they clearly were not.
White collar criminal defense lawyer Lanny Breuer was put in charge of prosecuting banking miscreants. He did nothing until the statute of limitations expired then promptly quit, showing up at his old gig – getting paid by the people he was supposed to be prosecuting – a week later.
People were losing their homes. Kids were sleeping in cars and pay by the night no-tell motels. Ordinary people were being run over.
As if the professional predators weren’t enough, an army of opportunists came out of the woodwork to chew up what was left of ordinary folk. Loan modification “experts” charged fees for nothing. Some foreclosure defense attorneys stole houses (though others were very good at what they did). At least one popular left-wing “investigative journalist” eventually admitted “everybody” interested in reducing foreclosures must be in it for something personally. When I told him the something was trying to prevent misery and homeless, he didn’t believe it.
This frustration, the betrayal from the right and the left, led to enormous anger. People wanted to burn something down and, at just the right time, Trump came down the escalator promising to do exactly that.
With that, here are a few stories I remember from that time about people I met. They’re all real so I’m not using their name.
G is a strikingly beautiful woman in her late 20s with a husband and two kids. They bought a house in a hip up-and-coming neighborhood to fix it up which should be no problem since he was in construction. When the bust came he lost his work, they couldn’t afford their payments, and the bank foreclosed. At one point over half the houses on their block were in foreclosure. As banks paid out bonuses they struggled to feed the kids. With a final hearing coming up, she wanted to make pornographic movies to bring in some money; he was adamantly opposed to the idea. They lost to the bank in a one-minute rigged rocket docket hearing. Soon after, a bank representative showed up at their door but rather than evicting them told them they could live rent-free for three years plus offering him a job taking care of the other foreclosed houses on the block.
J is in construction, a man in his early 40s. After work disappeared he was eventually forced to sell his tools to feed his family. With few tools left, an elderly man came by and asked what he was doing. He explained and the old man reminded him that without the tools, he’d probably struggle to find work. J agreed. The old man said it reminded him of the Great Depression except that “back then people cared about one another.” The man then gave him $20 for a beat-up screwdriver. They both cried. His family ended up living in a converted motel.
E was an immigrant, a single mom living the American dream who purchased a small house by the highway. She was talked into a refi with easily affordable payments by a fast-talking man who took advantage of her limited English. She agreed to help pay for daycare for her daughter. Eventually, the payments skyrocketed. A bankruptcy lawyer talked her into declaring bankruptcy and leaving her house despite that she had no meaningful assets, limited income, and foreclosures often took years at that point; she could have stayed in her foreclosed house a long time. She moved into a friend’s bungalow with a brothel on one side and a drug dealer on the other. The bankruptcy paperwork showed the bank claimed a loss greater than they actually suffered which was paid out by a stop-loss agreement with the federal government.
D was a foreclosure lawyer in charge of an enormous firm. He was a fraudster, overseeing the forgery of hundreds of documents a day. He took the “back office” of his law firm public through a SPAC, earning himself a fortune in fees, despite that non-lawyers may not own law offices. When key banking clients fled due to the fraud the stock price collapsed but by then he’d cashed out. The attorney general opened an investigation but, by then, the clients were gone and the stock nearly worthless. Eventually, he was disbarred but never prosecuted. He purchased 150 franchises for a popular hamburger restaurant.
There are countless people similar to those in the first categories and they were justifiably livid. They were ripped-off, used, abused, and then literally thrown to the curb like trash. Government officials did nothing to help them and failed to even protect them from scam artists and predators.
Yes, there are plenty of people who voted for Trump because he’s a racist. And lots wanted an autocrat. Plenty are grifters or wannabe grifters. A few are religious fanatics who want to establish an American theocracy and see Trump as a means to that end. But there’s a whole batch who just wanted to burn the crooked, corrupt, and rotten system to the ground. They wanted to let the bull into the china shop. Like many, I support Joe Biden and hope he wins. But I also hope that he does something to heal the still festering wounds from so long ago, along with the more recent ones caused by the pandemic. Trump didn’t create the hate; he just harnessed it for his own ends.
I’ve been living in France. Europeans used to be supportive of the US or angry. Now, they just feel the country is a pathetic mess. Every European country has suffered through crooks and crazed rulers over the years so nobody feels like the US will permanently fall apart; they know countries eventually self-correct. However, they also know the setbacks are personally painful and the damage can last a long time.