You’re right that the lending practices were absolutely predatory and that decades of deregulation created the mess. But the issue isn’t whether Obama could wave a magic wand - it’s that he had very specific tools at his disposal that he chose not to use effectively.
Congress literally wrote into the TARP legislation that the funds should be used to “prevent avoidable foreclosures” and left the details up to the incoming president. Obama’s own economic adviser Larry Summers promised Congress they’d commit $50-100 billion to address foreclosures, but when push came to shove, they designed a program (HAMP) that was entirely voluntary for banks and helped only about 1 million homeowners out of 10 million at risk. Even worse, according to Elizabeth Warren and the TARP inspector general, Treasury Secretary Geithner explicitly told them the program was designed to “foam the runway” for banks - meaning it was intended to help banks absorb foreclosures slowly, not actually save homes.
The administration also had massive leverage through law enforcement. Banks had committed widespread fraud in the foreclosure process - wrong dates, missing signatures, foreclosing on homes they didn’t even own the mortgages to. Under existing law, this gave the federal government enormous power to force banks to negotiate. But the FBI, DOJ, and IRS basically refused to use any of it because they were worried about threatening bank balance sheets.
Nobody expected Obama to fix decades of bad policy overnight, but when you have Congress giving you $700 billion and explicit authority to help homeowners, and you end up designing a program that actually makes the foreclosure process more efficient for banks, that’s a policy choice. Dodd-Frank was important for preventing future crises, but it did nothing for the millions of people losing their homes in real time. The frustrating part is that this wasn’t just morally wrong - it was bad politics and bad economics that weakened the recovery and contributed to the populist backlash we’re still dealing with today.
