The Word Not Spoken: Foreclosure

I didn’t watch the SOTU last night–though I did follow along on Twitter. It seems like those actually watching came away with a renewed belief in American exceptionalism, which I suppose is one important–but not necessarily wise–point of the SOTU. Huzzah! USA! USA! USA!

And I’ll have more to say later about other parts of the content of the speech. But for the moment, I wanted to call attention to one word not spoken: foreclosure.

Mind you, the mortgage crisis did not go without mention. Here are the places where the giant trauma that has devastated our economy was discussed:

One year ago, I took office amid two wars, an economy rocked by severe recession, a financial system on the verge of collapse, and a government deeply in debt. Experts from across the political spectrum warned that if we did not act, we might face a second depression. So we acted – immediately and aggressively. And one year later, the worst of the storm has passed.

But the devastation remains. One in ten Americans still cannot find work. Many businesses have shuttered. Home values have declined.

[snip]

These struggles are what I’ve witnessed for years in places like Elkhart, Indiana and Galesburg, Illinois. I hear about them in the letters that I read each night. The toughest to read are those written by children – asking why they have to move from their home, or when their mom or dad will be able to go back to work.

[snip]

Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis. It was not easy to do. And if there’s one thing that has unified Democrats and Republicans, it’s that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal.

But when I ran for President, I promised I wouldn’t just do what was popular – I would do what was necessary. And if we had allowed the meltdown of the financial system, unemployment might be double what it is today. More businesses would certainly have closed. More homes would have surely been lost.

[snip]

Let me repeat: we cut taxes. We cut taxes for 95% of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers.

[snip]

We cannot afford another so-called economic “expansion” like the one from last decade – what some call the “lost decade” – where jobs grew more slowly than during any prior expansion; where the income of the average American household declined while the cost of health care and tuition reached record highs; where prosperity was built on a housing bubble and financial speculation.

[snip]

As hard as it may be, as uncomfortable and contentious as the debates may be, it’s time to get serious about fixing the problems that are hampering our growth.

One place to start is serious financial reform. Look, I am not interested in punishing banks, I’m interested in protecting our economy. A strong, healthy financial market makes it possible for businesses to access credit and create new jobs. It channels the savings of families into investments that raise incomes.

[snip]

The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments. This year, we will step up re-financing so that homeowners can move into more affordable mortgages. [my emphasis]

Now, I get it. The point of the SOTU is to speak of the positive, to look forward, not back. You don’t want to plant a bummer word like “foreclosure” in the middle of such a speech, like a turd in a punchbowl, to kill the buzz. I get it–pundits were looking to count the number of times Obama said “jobs” (23, by my count), and so were not focused on the housing crisis that is at the root of the jobs crisis.

But I am utterly fascinated by the way Obama dealt with this–probably his Administration’s single biggest failure–the failure to keep more people in their homes. Aside from the mention of those abstract children, asking why they have to move, there’s no admission of the human cost of the mortgage crisis. Instead, homes are just investments, the ability for individual families to spend more to stimulate the economy, a store of value. And the claim–that without the bank bailout, more homes would surely have been lost? I’m not sure I buy that. After all, as it is the banks can’t find the paperwork for the mortgages they hold, and if the crash had happened, I think people would have just become common law owners of their own homes (though admittedly job losses would have been far worse).

So while it’s perhaps a subtle rhetorical point, it is, to me, also a stunning revelation of the way in which the Administration still fails to see how the banks should be punished, because their fraud devastated all these families. Obama fails to see that housing has not just an upside–investment, jobs, growth–but also a huge downside of crumbling communities as one after another neighbor gets evicted from their home.

Obama, at least from his rhetoric, doesn’t see the foreclosures still happening all over this country (and he sure as hell didn’t admit that Commercial Real Estate is about to repeat the foreclosure pattern). Which is, I guess, why he’s never really going to fix that problem.