US presidential elections: The importance of ‘Middle’ America

The November election for next US President will probably be decided by six states Ohio, Wisconsin, Iowa, Michigan, Pennsylvania and Indiana, located in the Midwest of America

The November Election, if it is close, is likely to be decided in one or more of the states in Midwest America. To win the election a candidate needs 270 votes in the Electoral College. A vote in the Electoral College is decided according to the population. The New York Times Electoral Map shows at present states with 237 electoral votes solid on leaning Obama and 191 electoral votes solid or leaning Romney, while 110 votes are a toss-up.
The toss-up states are Florida, Nevada, Colorado, Virginia, North Carolina, Wisconsin, Iowa, and Ohio. Ohio has 18 Electoral College votes, Wisconsin has 10 and Iowa has 6.Together they add up to 34 votes which should be enough to swing any close election. Also, in the Midwest are two states (Michigan and Pennsylvania) leaning towards President Obama and one state—Indiana—leaning towards Governor Romney. So these are actually six states in play in the Midwest. President Obama is ahead at present in Ohio, Wisconsin as also Iowa but the margins are not very large and are clearly reversible. He leads by more than 10 points in the latest Michigan polls. However, as Jim Messina, President Obama’s campaign manager said recently, President Obama seems to be polling better in the swing state polls than in the national polls. 
President Obama is from the state of Illinois which is in the vicinity and Governor Romney grew up in Michigan which is also in the vicinity. Romney’s father was a governor of the state of Michigan. Representative Paul Ryan represents the 2nd district of Wisconsin in the House of Representatives and has put Wisconsin which President Obama won handily in the last election in play. There was a recall election for Republican Governor of Wisconsin Scott Walker which was regarded as pivotal. However, Governor Scott Walker’s conservative policies of tax cuts, spending cuts and union bashing led to a very polarising election where there was a lot of outsider interest both from deep pocketed donors as also from trade unions. 
The state of Wisconsin in the process has become extremely energised. Governor Romney thinks he has an opportunity there and is ratcheting up his game in the state. Further the auto bailout, one of the signature achievements of the Obama presidency which helped to save Detroit, is a big issue in the election. There are a lot of ancillary industries to the auto industry in Ohio and President Obama has been tom-tomming his decision to save his auto industry. President Obama also claims that Governor Romney was opposed to a bailout and actually was ready to let the auto industry go under which is not exactly true. 
Governor Romney wanted a managed bankruptcy to save the auto industry. However, the problem with the managed bankruptcy is that it would have put a judge in charge of the bankruptcy and the auto companies and would not probably have been as efficient as the auto czar put there by President Obama. Further on there has been a nascent through distinct manufacturing revival in the Midwest and the state of Ohio has been a particular beneficiary of this trend. Up to a hundred thousand manufacturing jobs have come back to America for the first time since the nineties and President Obama is taking credit for that. To put the hundred thousand jobs in perspective, there are twenty three million unemployed people in America. 
But the Midwest economies seem to be doing better than the rest of America. Also, the selection of Representative Paul Ryan of Wisconsin has energised the Republican Party in the Midwest. They are ready to put up a good fight. It is also important to note that no Republican candidate has ever won the presidency without winning the state of Ohio. In that sense it is a true bellwether state and that is how large the stakes are for Mitt Romney.   
The picturesque Midwest was immortalised by Saul Bellow and the American heartland is all in play. This election will be probably decided by the Midwest of America and the Middle East.
(Harsh Desai has done his BA in Political Science from St Xavier's College & Elphinstone College, Bombay and has done his Master's in Law from Columbia University in the city of New York. He is a practicing advocate at the Bombay High Court.)


United States presidential polls: The Middle East right in the middle

Saying that Americans are very popular in the Middle East seems to fly in the face of the facts. Will this issue be politicised in United States polls this time?

Writing for a unanimous court, Chief Justice Oliver Wendell Holmes said in the case of Shenck Vs United States that “the most stringent protection of free speech would not protect a man from falsely shouting fire in a theatre and causing panic. The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that may well bring about the substantial evils that congress has a right to prevent.”

Last week the trailer of a film called the “Innocence of Muslims”, a film which shows Prophet Mohammed in a bad light, was distributed on the internet and led to widespread protests in the Arab world and led to an attack on the American missions in Benghazi where the American Ambassador was killed by a rampaging mob to Cairo and Yemen where a large number of protesters tried to enter the American mission and cause damage to life and property. It is worth remembering that the context for shouting fire in a crowded theatre had suddenly changed. Now the theatre was the world itself and shouting fire in a theatre meant something quite different.  

Suddenly foreign policy which had lain dormant in the election campaign despite the ratcheting up of tensions in the Middle East took front and centre in election campaign. Governor Romney, seeing an opportunity to put President Barrack Obama on the back-foot, condemned the weakness of President Obama’s policy and slammed him for the ‘apology’ the Cairo Embassy made while condemning the film. The embassy had released a statement saying “The Embassy of the United States in Cairo condemns the continuous efforts by misguided individuals to hurt the religious feelings of the Muslims... respect for religious beliefs is a cornerstone of American democracy. We firmly reject the action of those who abuse the universal right of free speech to hurt the religious belief of others.” Mitt Romney quickly pounced on the statement and accused the American government for apologising to Muslim fundamentalists who had tried to storm the American Embassy in Cairo. However, what Mitt Romney did not realise was that this statement was made before the Embassy in Cairo had been stormed. Further it was soon evident that the Ambassador had acted on his own accord and had not consulted Washington before releasing that statement. President Obama quickly fired back saying that Mitt Romney fired first and aimed later.

But the Obama administration also seemed to have been caught unawares as President Obama declared on television that Egypt was not an ally of the United States. Egypt not an ally?  Further there seemed to be a district disconnect between the way in which the Obama administration saw its relationship to the Muslim world and the reality that we see on television day in and out. Ambassador Susan Rice refused to acknowledge to Candy Crawley that the United States’ relationship with the Muslim world had not improved after President Obama took over as president and insisted that she had walked around Benghazi and that Americans were very popular there  implying that Americans were very popular in the  Muslim world. This seems to clearly fly in the face of the facts. The Republicans tried to compare the circumstance to those during the time when Jimmy Carter was president and students had taken 52 hostages at the American Embassy in Tehran. Of course the reality on the ground was quite different though it was 1979 that an American diplomat had been last killed. Americans generally tend to rally around their president in times of trouble, so it was assumed that no damage had been done to President Obama’s re-election effort but the State Department announced that they were expecting demonstrations in the next two three months in the run up to the presidential election.

Mitt Romney’s attempted politicization of the event had the potential of backfiring. However, even a week after the September 2011 events in Cairo passions in Islamic countries were not cooling down and if the unrest continues and spreads this will be challenge to President Obama in the run up the elections. Americans do tend to rally around their commander-in-chief in times of crisis. However, the narrative of Romney’s attack on President Obama’s foreign policy as being weak will begin to bite if the unrest continues. Governor Romney has a task cut out for him to give an alternate foreign policy vision which would neither lead America into a tangle like Afghanistan and Iraq and is different from the failed neocon policies and at the same time can portray President Obama’s foreign policy as weak and vacillating.  One way or another it seems that the Middle East is going to remain front and centre in the election campaign. Prime minister Benjamin Netanyahu of Israel was also busy ratcheting up pressure on President Obama to draw a “red line” for Iran beyond which America would not tolerate progress towards building a nuclear weapon, and the price of oil was steadily climbing and will continue to climb with the quantitative easing that the Fed had introduced.

So the Middle East will pose a challenge to the president and give an opportunity to the challenger in the run up to the presidential election. But Governor Romney will have to be more sure footed now onwards and he will have to sound presidential while attacking the president.

(Harsh Desai has done his BA in Political Science from St Xavier's College & Elphinstone College, Bombay and has done his Master's in Law from Columbia University in the city of New York. He is a practicing advocate at the Bombay High Court.)


Foreclosure Fail: Study in the US pins blame on big banks

A study by the US government and academic researchers finds that about 800,000 homeowners missed out on mortgage modifications because of big banks' poor performance

Over the past several years, we've reported extensively on the big banks' foreclosure failings. As a result of banks' disorganization and understaffing — particularly at the peak of the crisis in 2009 and 2010 — homeowners were often forced to run a gauntlet of confusion, delays, and errors when seeking a mortgage modification.

But while evidence of these problems was pervasive, it was always hard to quantify the damage. Just how many more people could have qualified under the administration's mortgage modification program if the banks had done a better job? In other words, how many people have been pushed toward foreclosure unnecessarily?

A thorough study released last week provides one number, and it's a big one: about 800,000 homeowners.

The study's authors — from the Federal Reserve Bank of Chicago, the government's Office of the Comptroller of the Currency (OCC), Ohio State University, Columbia Business School, and the University of Chicago — arrived at this conclusion by analyzing a vast data set available to the OCC. They wanted to measure the impact of HAMP, the government's main foreclosure prevention program.

What they found was that certain banks were far better at modifying loans than others. The reasons for the difference, they established, were pretty predictable: The banks that were better at helping homeowners avoid foreclosure had staff who were both more numerous and better trained.

Unfortunately for homeowners, most mortgages are handled by banks that haven't been properly staffed and thus have modified far fewer loans. If these worse-performing banks had simply modified loans at the same pace as their better performing peers, then HAMP would have produced about 800,000 more modifications. Instead of about 1.2 million modifications by the end of this year, HAMP would have resulted in about 2 million.

That's still well short of the 3-4 million modifications President Obama promised when he announced the program back in early 2009. But it's a big difference, and a reasonable, basic benchmark against which to compare the program's failings.

The report does not identify these poor performing banks, but it's not hard to ID them. A “few large servicers [have offered] modifications at half the rate of others,” the authors say. The largest mortgage servicers are Bank of America, JPMorgan Chase, Wells Fargo and Citi.

Bank of America in particular (the largest of all the servicers when HAMP launched) has been far slower to modify loans than even the other large servicers, as other analyses we've cited haveshown.

Rick Simon, a spokesman for Bank of America, said the banks' “home retention results are significant and in line with our industry peers to date.”

The Home Affordable Modification Program (HAMP) paid subsidies to mortgage servicers on the theory that doing so would convince them to embrace modifications. The authors say that voluntary approach apparently didn't have much effect with the biggest servicers. They weren't very good at modifying loans before HAMP was launched and weren't much better after it launched.

The authors wrote that while they can't be sure why these banks underperformed, they “may not have responded to the program since doing so would involve changing their business focus from processing and channeling payments to actively renegotiating loans. In addition, this may have involved significantly altering their organizational capabilities, such as building appropriate infrastructure and hiring and training servicing staff.”

That echoes on our reporting on how ill-suited the big banks were when it came to modifying loans. The result inside the banks has sometimes been chaosAs one Bank of America employee complained, "The whole documentation collection thing has got to be purposely not funded. Like, I can't get a fax. I work for a huge bank that has tons of money, and you're telling me that I can't get a fax?"


Since HAMP's oversight has been lax — the Treasury Department, which runs the program, has responded indulgently to mortgage servicers breaking HAMP's rules — banks haven't had to worry much about their low modification rates. (You can see this explained with a song. It's also a big part of our book on the foreclosure crisis.)


A Treasury spokeswoman, responding to the new report, said HAMP had resulted in “one of the most comprehensive compliance reviews of mortgage servicing operations in the country. Servicers in the Making Home Affordable Program are subject to an unprecedented level of compliance oversight.”

The report did have some positive findings concerning HAMP. As we've reported, modifications in the program have been more generous to homeowners than modifications done outside HAMP. The authors also found that the program did boost the number of modifications — i.e. it caused modifications that likely would not have happened if not for the program.


The authors also say that HAMP might have induced more modifications if the program had not required such extensive screening of homeowners seeking a modification. From the program's launch, the administration emphasized that the program wouldn't help the wrong sort of “irresponsible” homeowner. That emphasis led to requirements that homeowners send in lots of paperwork to prove their income, which in turn further taxed the big servicers' inadequate systems.


Despite the recent stabilization in home prices and a drop in the rate of homeowners falling behind on their payments, HAMP's limited impact remains a very relevant issue. Even in the sixth year of the foreclosure crisis, the country remains saddled with an extraordinarily high number of loans in foreclosure — about 2 million. That backlog hasn't improved much in the last couple years, meaning it's still hard to forecast when the foreclosure rate will return to a normal level.




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