Mortgage Crisis

Freddie Mac paid Gingrich’s consulting firm at least $1.6 million for his time. Exactly how much — and how much went to Gingrich — is still unknown, because reporters haven’t seen the contract between Freddie Mac and Gingrich’s Center for Health Transformation. Gingrich initially said Freddie Mac refused to waive a confidentiality agreement that would allow him to release the contract. But:

Freddie Mac officials said last week that Gingrich was “welcome” to release the contract, under which his consulting firm was paid at least $1.6 million over eight years for his services.

So Gingrich said it’s up to his partners at his former firm to release it. For some reason, a lawyer for Center for Health Transformation is still blocking the release. He wrote to Bloomberg News:

Even though Freddie Mac is willing to allow the document to be made public, allowing a release of the documents in this case might put the confidentiality of other Center for Health Transformation clients at risk, said Stefan Passantino, an attorney representing the firm.

“The risks of any kind of confidentiality waiver, even if the company tried to limit it to one client or one document, are too great to be feasible,” Passantino said in an e-mail yesterday. “A limited waiver is not possible and I am unable to authorize such a release.”

It’s just too risky! Other clients may accidentally waive their own confidentiality agreements and the world will learn how much Newt Gingrich bilked them for. Releasing just one specific document relating to one specific client could put the entire world at risk of an EMP strike, too. You can’t be too careful.

Gingrich is in the midst of his spite-driven campaign death spiral at the moment but he’s still loudly defending himself against the charge that he actually did what Freddie paid him to do, because that would, in the GOP interpretation of history, make him responsible for the entire recession.

Fannie and Freddie by no means “caused” the crisis — they entered the subprime game extremely late, the worst loans were made by the private sector, and the securitization of bad mortgages was the work of wholly Wall Street wizards — but the right-wing line against them has a grain of truth to it. Democratic insiders controlled Fannie and Freddie, and Fannie in particular threw money and favors at politicians in order to avoid facing or complying with tougher regulations (just like wholly private corporations do every day).

But the Gingrich role in this rankles the GOP in particular because it means they can’t simply blame Barney Frank and Barney Frank alone for the financial crisis. Gingrich was on the payroll to perform outreach to Republican lawmakers. The point of the influence-buying game is that it works best when it’s bipartisan.

Gingrich’s job was to get Republicans on board with the profit-maximizing strategies of the GSEs, and his own former chief of staff was Fannie’s senior vice president for regulatory policy (i.e., lobbying for looser regulations). No one could’ve predicted that they’d need the GSEs to be a handy scapegoat a few short years later.

Households headed by adults ages 35 and younger had a median net worth of $3,662 in 2009. That marks a 68% decline in wealth, compared to that same age group 25 years earlier.

Over the same time frame, households headed by adults ages 65 years and older, have seen just the opposite. Their wealth rose 42%, to a median of $170,494.

It gets worse, for young people: “37% of the young households held zero or negative net worth in 2009, up from 19% in 1984.”

Boy, so what are all these old people complaining about, so much? (Immigrants, mostly.)

This growing disparity is the result of a lot of factors, but the most powerful force driving the net worth of young people ever downward is debt. Lots of young people are, as we have repeatedly noted, graduating college with mountains of student loan debt, and today’s job market is not exactly robust. And many young people who listened to the conventional wisdom and purchased a home have found that to be a poor investment. Old people who already owned their homes weathered the housing bubble and its collapse largely intact. Homeowners 35 and under were and are simply screwed.

To make up for the fact that advertisers and film industry marketers don’t care for them, old people instead have the United States Congress, which is made up almost entirely of old people. For old people, America is practically a European socialist utopia, with single-payer healthcare and everything. It’s laissez-faire for the rest of us suckers.

The fact that this gap is getting worse helps explain why so many older Americans don’t get it, when the young people complain. The amount of debt young Americans take on today is way higher than it used to be, the opportunities for class mobility are shrinking, and the life choices that worked for earlier generations looking to join the middle or upper classes (college and homeownership) have largely become massive rip-offs.

With the most recent crash and recession, young people have gone from a generation that worried they’d never be able to afford the homes they grew up in to one that is unable to leave those homes (and then they’re called shiftless and lazy), and the response of the political class has been … austerity for most. It is the primary argument of the austerity pushers (and their allies, the deficit hawks) that young people should give in and accept that “we” can’t afford to sustain the fairer society that older Americans enjoyed. That argument would be more convincing if the current Bad Times were affecting everyone equally, instead of simply the already young and poor, but every week more data arrives showing that those who made a killing before the house went bust are doing fine, thank you.

Dimon is a Democrat and former BFF of President Barack Obama, but one day Obama said “fat cat bankers” and everyone on Wall Street threw a tremendous tantrum. The president has gone on to lightly criticize the financial industry and endorse a plan to slightly raise income taxes on very wealthy people, which has reportedly driven scores of Democratic backers from the finance industry into the open arms of the GOP.

Here’s someone explaining the switch (this is an anonymous source talking to the New York Post, which has a vested interest in presenting the Democratic Party and Barack Obama as avowed enemies of capitalism and free enterprise, but I assume this is a fairly accurate explanation of Dimon’s thinking):

One insider said, “There is not a person on Wall Street, with the exception of the genetic Democrats, who would get anywhere near supporting Obama. The hostility to the administration is huge. Dimon will continue to look bipartisan, then work behind the scenes to get a Republican elected.”

Dimon supporting a Republican is only natural. Billionaire financial executives have obvious reasons to support a Republican presidential candidate. The Republican party line is that rich people should keep more of their money and the financial sector should be lightly or not-at-all regulated. But when the “longtime Democrats” who also happen to be bank executives make the switch to the Republican party, they for some reason feel the need to come up with justifications beyond material self-interest. Thus, flailing attempts at sustaining the Democratic party’s disappearing middle-class base by lightly soaking the rich are seen as horrific personal attacks on innocent bankers. This makes these billionaires seem like hypersensitive children, but that is apparently preferable to being seen as attempting to maximize their profit by directing political support to the people most likely to allow them to continue vacuuming up and hoarding the world’s wealth.

The Democratic party has been extraordinarily friendly to the interests of the financial sector since the Clinton era, but they are learning now what should’ve been obvious all along: It is impossible to be more billionaire-friendly than the Republican Party, because the Republican Party’s entire political philosophy is that government should exist solely to serve the interests of the wealthy.

Dimon’s argument hinges on the idea that it’s unfair to tarnish his industry as a whole because of the actions of a few bad apples. JPMorgan Chase, you see, is one of the “good banks,” which means it is one of the banks that survived the 2008 financial crisis and remains incredibly profitable. It does not mean that the bank is in any sense a positive force for good or a productive arm of a healthy economy, unless you think illegally foreclosing on military families and driving counties to the brink of bankruptcy while bribing officials are good, productive things for Jamie Dimon’s firm to be doing with its billions of dollars of revenue.

The moral is that we as a nation must never spook the skittish “job-creators” like Dimon, lest they leave us for greener pastures, as Dimon has left Obama for Romney.