Nearly three years later, it hasn’t worked out. Obama has spent just $2.4 billion of the $50 billion he promised. The initiatives he announced have helped 1.7 million people. Housing prices remain near a crisis low. Millions of people are deeply indebted, owing more than their properties are worth, and many have lost their homes to foreclosure or are likely to do so. Economists increasingly say that, as a result, Americans are too scared to spend money, depriving the economy of its traditional engine of growth.
The Obama effort fell short in part because the president and his senior advisers, after a series of internal debates, decided against more dramatic actions to help homeowners, worried that they would pose risks for taxpayers and the economy, according to numerous current and former officials. They consistently unveiled programs that underperformed, did little to reduce mortgage debts owed by ordinary Americans and rejected a get-tough approach with banks.
Doing more to address the housing crisis may be crucial not only for an economy flirting with another recession but also for a president running for reelection.
After watching their homes’ values collapse in recent years, a quarter of all homeowners are “underwater,” owing more than their homes are worth. The president’s housing policy has caused a rift with political allies, such as black and Hispanic groups, whose members have been disproportionately hurt by the crisis.
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