This weekend, the Federal Reserve extended a $30 billion credit line to finance the takeover of near-bankrupt Bear Stearns by fellow Wall Street firm JPMorgan Chase.
During today’s news briefing, reporters questioned White House Press Secretary Dana Perino on the Fed’s actions, noting that the White House has repeatedly refused to extend similar assistance to homeowners facing foreclosure. Perino replied that help to homeowners — a “boost of liquidity” — would come “in the form of a stimulus package and a tax rebate.” Watch it:
The average rebate check will amount to about $600 for single people and $1,670 for middle income families. Compare this figure to the nationwide median mortgage payment, which stood at $1,566 in September. Or to the average increase in subprime mortgage payments in early 2007, which was $320 per month.
These checks obviously won’t help Americans stave off foreclosure — a frightening reality facing an increasing number of people. Foreclosure rates skyrocketed 60 percent last month from February 2007, and Americans own less equity in their homes than they have since World War II.
Incredibly, the White House argues with a straight face that the Bear Stearns bailout was a necessity, but that addressing the needs of millions of homeowners would be an “overcorrection,” as Bush put it on Friday. Just yesterday, Secretary of the Treasury Henry Paulson defended the Wall Street bailout while insisting that “all” the proposals on the housing crisis he had seen “raise more problems and do more harm than they would do good.”
In a new op-ed, the Center for American Progress’s David Abromowitz decries the White House’s hypocritical, pro-business-at-all-costs approach:
[C]onsider that big oil company tax breaks are too integral to our energy plan, but relief for millions of drivers squeezed by rising gasoline prices would be bad economic policy. Or that eliminating the estate tax is promoted as tax fairness, but vetoing the expansion of health care to millions of children through the State Children’s Health Insurance Program as too expensive is prudent budgetary management. The list goes on and on.
There are many good reasons, of course, to act to avert a Bear Stearns bankruptcy when one considers the ultimate impact on millions of Americans and around the world of a Wall Street collapse. But the reasons are no less compelling when the devastation hits individual Americans directly—home by home, block by block, neighborhood by neighborhood.
QUESTION: But people who are facing, say, foreclosures, individuals, the little guys who are facing their foreclosure, looking at the big guys getting government, if not brokered, certainly, they’re overseeing deals that are engineered to, sort of, keep the big-picture financial community afloat. And they’re saying, Well, where’s my boost of liquidity?
PERINO: They’re going to get that boost of liquidity in the form of a stimulus package and a tax rebate that’s coming to them the second week of May.
QUESTION: But that’s not going to save their houses.