Obama's Tepid Incremental Housing Policy

Andrew Leonard has written an excellent article on the role that housing policy has played in the U.S. economy and politics: http://www.salon.com/2012/10/10/obamas_hard_housing_lesson/ .  The disappointment in Obama's performance can be traced back to his speech in Arizona on February 18, 2009, in which he announced the Homeowner Affordable Modification Program (HAMP).  The next day Rick Santelli made his famous rant on CNBC, which objected to bailing out "losers", and which went viral and sparked the "Tea Party" movement.  

"Not much of a grace period there — the Tea Party revolt started one month into Obama’s administration, and it was directly inspired by the Obama administration’s initial attempt to deal with the most pressing economic problem facing main street Americans: the collapse of the housing market."

Ironically, the tepid nature of the HAMP  disappointed Democrats, but still managed to  rile Republicans.  To me, the "either-or" choice of a conventional stimulus package over a truly bold housing policy was Obama's biggest mistake. It was understandable that an approach that spread benefits more widely would be less politically risky, but there was an appetite for bold policy--and a successful housing policy would have done at least as much as the ARRA to stimulate a faster recovery. The rhetoric of "summer of recovery" in 2010 reveals that this wishful thinking about a conventional economic recovery was alive in the White House, even though they knew that this was not a conventional recession.

That in a nutshell, is  my problem with Obama--given how popular he was in Feb 2009, and how much money he gave the banks, why couldn't he make the policy work?      "The administration failed to use its leverage with the banks to get them to participate meaningfully in the plan, and appeared to devote relatively little resources or political muscle to making it effective."

Of course, I realize that this is easier said than done--how to regulate Wall Street is a problem that has bedevilled both Right and Left in America--and continues to be the biggest problem with HAMP's successor "HARP 2.0" : http://news.firedoglake.com/2012/05/11/donovan-acknowledges-banks-gaming-harp-2-0-to-increase-profits/ .

In a sense, the problem with housing policy in 2009  was the same as the problem with Obama's first debate performance in 2012: it conceded far too much to the Opposition. Obama the Conciliator is not what excited people about him  in 2008.