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Jimmy Stewart Has Left the Room


You wouldn't think that left-wing journalist David Sirota and Steve Bannon would agree on much. But they're finding an unlikely accord in an idea that seems obvious once you start thinking about it: We're all still living in the ugly aftermath of the 2008 financial meltdown.

"The legacy of the financial crisis is Donald J. Trump," Steve Bannon told New York magazine in 2018 and things have only gotten worse since then, as the pandemic sharpened the divide between the stock owning class and, as Bannon put it, the deplorables who "got fucked" in 2008.

Here's the tough part for Democrats. While the financial crisis hit at the end of the Bush administration, the Obama administration is responsible for the solutions - if you can call them that.

Obama and his advisors, including his Treasury Secretary, former private equity banker and Federal Reserve president Tim Geithner, oversaw what may be the greatest transfer of wealth in American history. That was the trickle up from middle- and working-class Americans to the super rich through the medium of real estate.

This is the housing crisis we are living with today.

How did this happen? Investigative reporter Aaron Glantz told us in 2019.

There are certain books that feel so much like the Philosopher's Stone - you know, the single idea that explains everything - that you drive your friends crazy talking about nothing else for a few weeks, or a few months.

That was me after I read Glantz's Homewreckers. Equalled only by Jessica Mitford's The American Way of Death as a classic of investigative reporting, Homewreckers details how a handful of rich men profited from the Obama administration's efforts to stave off financial collapse in 2008.

Remember how it was? In the first days of the crisis, the fear that America could revisit the days of the Great Depression left little time to think - at least for ordinary people.

The crisis started in the last days of the Bush presidency. Forced to hit the ground running, the Obama administration oversaw a fire sale that resulted in mass foreclosures. In 2008 alone, 3.1 million Americans received foreclosure notices, one in every 54 U.S. households.

Who bought these homes at bargain prices? A short list includes Tom Barrack, the real estate magnate and Trump advisor recently indicted on charges of lobbying for a foreign government, obstruction of justice, and lying to federal officials, and Steve Schwarzman, CEO of the Blackstone Group, which has become one of the country's largest owners of single-family homes.

The scale of the shift in ownership is staggering. In 2012 alone, Blackstone was spending $100 million a week picking up bargain basement foreclosures. (Like the nouveau riche of yore, the self-made Schwarzman has bought himself "class" by donating vast sums, in his case, to Oxford University and the New York Public Library; his daughter Zibby Owens is a publishing "influencer" who holds events for her pet writers and has a podcast about how busy moms are, even when they can afford private schools and nannies.)

If you count the financiers engaged with the banking industry who swooped in to profit from the crisis, the list includes Trump Treasury Secretary Steve Mnuchin, who got a sweetheart deal when he pulled together a group of investors to buy a troubled California bank and proceeded to ruthlessly foreclose on homeowners, and Wilbur Ross, Trump's Secretary of Commerce, a player in mortgage loan servicing scandals whose history of self-promotion and ethical lapses that put him in Trump's league.

It's notable that both Mnuchin and Ross managed to avoid the Trump administration's frequent personnel purges. Subsequent reporting by Forbes and others shows that Ross profited mightily during his stint as Commerce Secretary.

As Glantz reports, there were alternatives to the pennies on the dollar sale of family homes to ruthless speculators. Back in the 1930s, the federal government's Home Owner's Loan Corporation (HOLC) bought bad loans from mortgage holders and issued new long-term mortgages that kept Americans in their homes.

"Communities were stabilized and the government got its money back. The homeownership rate surged, and an era of shared prosperity blossomed for decades - especially in the white neighborhoods where HOLC operated," Glantz writes.

As Glantz points out, the largesse wasn't evenly distributed - this Depression-era program engaged in the practice of red-lining, targeting black neighborhoods as bad risks. But it could have provided a model that would have produced a very different result.

Why didn't Obama administration officials go back to the tried and true solution? Glantz doesn't seem to have the answer, and it cannot be found in Obama's own memoir, A Promised Land. How much of the mishandling of the financial crisis should be laid squarely on the doorstep of Obama himself? A well-placed reporter needs to hit Obama with that question sooner rather than later. Perhaps Obama's decisions are simply the result of an innate conservatism that his groupie-like supporters tend to ignore. Like anyone else, Obama is complicated. And it's possible that in the midst of a crisis nobody had the time to look back to Depression-era history.

With Americans, especially Millennials, facing a 2008 of their own with rising rents and increasingly unaffordable home prices, it's time to look more deeply into what led us to the current crisis. Left-wing journalist David Sirota is making his bid with a podcast released this week. A controversial figure who's been accused of blurring the line between his role as political advisor to candidates and journalist, Sirota is, at the very least, a trenchant analyst. Meltdown, his podcast examining what went down in 2008, is worth a listen.

Meltdown is on Audible, produced by Alex Gibney, called "the most important documentarian of our time" by Esquire, whose films include The Smartest Guys in the Room. You may not agree with all of his conclusions, but Gibney's involvement points to a re-examination of the financial crisis and its long-term ramifications as a story we'll be hearing more about.

The machinations detailed by Glantz and now Sirota, led us to the tragedy that Mike Medberry wrote about this week in a story we called Stick Built. It is an American Tragedy, no less than the book Theodore Dreiser wrote in 1931, and the characters have disturbing echoes of that earlier tale.

broken image

Even a stopped clock is right twice a day. In this case, about the problem if not the solution.

Susan Zakin, editor of Journal of the Plague Years

Matt Taibbi: America Takes a Wrong Turn

When Barack Obama was elected on November 4th, 2008, America’s political landscape appeared altered permanently. Obama’s “realigning” victory put his party in full control of the state, armed with a whopping 78-seat advantage in the House and a 59-41 edge in the Senate. Conventional wisdom held that the combination of massive youth and minority turnout and Obama’s re-conquest of so-called “Reagan Democrat” districts was a knockout blow to Republicans from which they’d never recover. The demographic picture was only going to get less white going forward, leaving Republicans, as the New York Times put it on Election Night, “contemplating where they now stand in American politics.” Pundits were convinced merely competent leadership by Obama would leave Democrats with a permanent supermajority.

What happened over the course of the next eight years, when the dream of forever-rule evaporated and the Democrats found themselves having to explain being vanquished by a foul-mouthed game show host, is the subject of Meltdown. To this day, the all-but-mandatory explanation for the Democrats’ 2016 disaster is a combination of racist reaction and Russian interference. Though race certainly played a significant role, the deeper explanation, still taboo, is the perception that the Obama administration’s handling of the 2008 crash was both corrupt and profoundly disillusioning. When the SS America struck an economic iceberg, the country watched Democrats fill the lifeboats with guilty bank CEOs, then waved from the horizon as everyone else went down with the ship.

Steve Bannon: How It Started

And by the way, this was completely brought on by the elites of the country and Wall Street. When I got to Harvard Business School in 1983, a bunch of professors were coming up with a radical idea that’s had a horrible negative consequence on this country and to the fabric of our society: the maximization of shareholder value; this was preached as High Church theology. The whole thing of the financialization of Wall Street, of looking at people as pure commodities and of outsourcing and globalization, came from the business schools and the financial community that had these radical ideas, and nobody kept them in check.

How the Banks Won and Americans Lost.

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