On April 19, Geithner evidently thought he had a criminal shakedown operation well in hand. Oops.

People are focused on the market implications of the downgrade, but that isn’t what this is about. It’s about a President who will now be relentlessly tagged with responsibility for a rating given by a disgraced organization whose victims should have liquidated them long ago.

No private entity should have the power to bring down a president with an arbitrary and unjustifiable wave of the hand. No company should be able to line up a nation’s assets and orchestrate a fire sale on behalf of Wall Street, and then give them a private showing about what’s in store. They should not have the right demand cuts that destroy critical social safety net programs that the public overwhelmingly supports like Social Security and Medicare, and they most certainly should not be able to crown a new king as they implement Wall Street’s shock doctrine vision for the future.

Plenty of smart people have weighed in on the Bank of America settlement with investors on $424 billion worth of mortgage backed securities. BofA will provide up to $14 billion in the settlement – $8.5 billion in cash, another $5.5 billion potentially in the next quarter – which they claim will cover all of the RMBS issued by Countrywide (they admit that Countrywide was the worst deal they ever made).

Bank of America has rejected a request to buy back $47 billion dollars in soured mortgage loans originated by Countrywide, who they bought in 2008. This will likely trigger legal action by the consortium of investors who called for the repurchases, including institutional giants Pimco and BlackRock, and the Federal Reserve Bank of New York. BofA, in a letter, denied that the loans were made or handled improperly.

The debate over the housing finance crisis takes place along the backdrop of 300,000 foreclosures a month and no credible plan to arrest that. It’s like arguing about where to build the bedroom in the renovation of a two-story house while it’s on fire. Policymakers haven’t done the job, simply put. And the only one thinking creatively about solutions to the crisis, or at least solutions to the intersecting jobs crisis, is PIMCO bond investor Bill Gross.

James Clyburn is a senior member of the Democratic leadership in the House. He has been meeting with the Debt Commission. He’s close to the White House, and he very much knows what everyone is planning and discussing. The fact that he is on board with Social Security benefit cuts (no matter what he wants to call it) should be of concern to everyone who cares about the future of the program.