When Americans started facing the threat of foreclosure at the height of the 2008 financial crisis, Barack Obama campaigned on a promise of a simple, straightforward, and elegant solution: Force big banks to accept some losses and write down the amounts homeowners owed on their mortgages, thereby avoiding mass foreclosures. Soon after winning office, Obama abandoned the pledge to the delight of his Wall Street donors.
Now, new data suggests that had Democrats instead used their huge congressional majorities to deliver relief, they could have rescued hundreds of thousands of families who were thrown out of their homes while Obama’s administration was bailing out the banks.
Separate data, meanwhile, suggests that lessening the blow of the housing crisis on middle-class families may have averted Donald Trump’s narrow victory in 2016.The data provides a powerful cautionary tale to President Biden and congressional Democrats as financial analysts have warned of the possibility of a significant increase in foreclosures this year.
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