Over the holiday, Zachary Goldfarb released a fairly remarkable article recounting a meeting between the President and top economists:
One year and one month before President Obama won reelection, he invited seven of the world’s top economists to a private meeting in the Oval Office to hear their advice on what do to fix the ailing economy. “I’m not asking you to consider the political feasibility of things,” he told them in the previously unreported meeting.
There was a former Federal Reserve vice chairman, a Nobel laureate, one of the world’s foremost experts on financial crises and the chief economist of the International Monetary Fund , among others. Nearly all said Obama should introduce a much bigger plan to forgive part of the mortgage debt owed by millions of homeowners who are underwater on their properties.
Obama was reserved in response, but Treasury Secretary Timothy F. Geithner interjected that he didn’t think anything of such ambition was possible. “How do we get this done through Congress?” he asked. “What could we actually do that we haven’t done?”
This was in October 2011, when talks on the foreclosure fraud settlement were in full swing. Timothy Geithner pled ignorance as to what the Administration could do, but they were in the midst of a negotiation where they had immense power to dictate terms to the leading banks in such a way that could, if they chose, mandate debt reduction. In fact, the weak settlement that ended up getting signed has so far seen more than half of its debt relief go to a process whereby borrowers are forced to sell their homes at a loss. This also came at a time, still true to this day, where Geithner’s Treasury Department hadn’t sanctioned a single mortgage servicer for failing to meet program guidelines under HAMP. And it came at a time where barely $3 billion of the initial $50 billion commitment from TARP, already authorized by Congress, had been spent.