Hypocrisy, thy name is Tim

Money talks, bullshit walks. My goodness, the administration is speedwalking lately! Neil Barofsky on why Ed DeMarco won’t be fired:

Although one can argue whether principal reductions are the right way to address the ongoing housing slump – I have championed principal reductions for years but acknowledge that there are passionate arguments on both sides of the issue – no one should be fooled that the administration’s entreaties to DeMarco are anything but political posturing. As I recount in my recently released book, Bailout, during my time as the special inspector general in charge of oversight of the TARP bailouts, Treasury Secretary Timothy Geithner, using the same justifications now offered by DeMarco, consistently blocked efforts to use TARP funds already designated for homeowner relief through a principal reduction program that could have a meaningful impact on the overall economy.


For example, in 2009, $50 billion in TARP funds had been committed to help homeowners through the Home Affordable Modification Program (HAMP), a program that the president announced was intended to help up to 4 million struggling families stay in their homes through sustainable mortgage modifications. Hundreds of billions more were still available and could have been used by the White House and the Treasury Department to help support a massive reduction in mortgage debt. But Geithner avoided this path to a housing recovery, explaining that he believed it would be “dramatically more expensive for the American taxpayer, harder to justify, [and] create much greater risk of unfairness.” Treasury amplified that argument in 2010, after it reluctantly instituted a weak principal reduction program in response to overwhelming congressional pressure. That program incongruously left it to the largely bank-owned mortgage servicers (and to Fannie and Freddie) to determine if such relief would be implemented. In response to our criticism that the conflicts of interest baked into the program would render it ineffective unless principal reduction was made mandatory (when in the best interests of the holder of the loan), Treasury reinforced Geithner’s early statements, refusing to do so primarily because of fears of a lurking danger: the ”moral hazard of strategic default.” The message was clear: No way, no how would Treasury require principal reduction, even when Treasury’s analysis indicated it would be in the best interest of the owner, investor or guarantor of the mortgage.


Indeed, at every critical juncture at which Treasury could have unilaterally implemented meaningful principal reduction, the same argument now presented by DeMarco was hauled out as an excuse for inaction.


Which is why it should not be surprising that rather than engage in bold action, such as replacing DeMarco with a recess appointment, the administration has responded with only a letter that seems primarily intended to distract attention from its own failed policies. The truth is that the administration – whether through principal reduction or otherwise – has never prioritized coming up with an effective approach to helping homeowners and reviving the housing market, even when it had a multi-hundred-billion-dollar TARP war chest at its disposal.


By late 2009, it was becoming apparent that HAMP would never come close to its stated goals. The program was designed poorly, and Treasury refused to hold the banks accountable for the abuses to which they subjected homeowners in the program. In one meeting I attended, after Secretary Geithner was pressed about the flaws in the HAMP program, he justified Treasury’s actions by explaining that the program would “foam the runway” for the banks by extending out the foreclosure crisis over time. In other words, Treasury was far more concerned with using HAMP to soften the blow of the housing crisis for the banks – just as the FAA once recommended spreading protective foam over a landing strip to prevent a disastrous crash of a malfunctioning airplane – than with helping millions of struggling homeowners. Now, three years later, with a tightening presidential election and a Democratic base disillusioned by the government’s abandonment of its promise to help homeowners (less than 8 percent of the funds originally allocated in TARP for foreclosure relief has actually been spent), Geithner and the administration would like to present themselves as having undergone a conversion.


Let’s be very clear about what is going on here. This is not a conversion – it is a political convenience. Geithner may well be correct when he wrote in a letter to DeMarco that an effective principal reduction program would “help repair the nation’s housing market” and that the refusal to do so is not “in the best interest of the nation,” but it is his own policies that are primarily to blame for where we are today.


As we enter the final phase of the election campaign, we need to end the meaningless political posturing and recognize that as a country we have severely mishandled the housing crisis. It may be a fair debate whether we should have gone with the “all in” approach that I and others have advocated or the “do nothing and let the market find its natural bottom” approach advocated by many conservatives. There should, though, be little question that the chosen policy – a “foam the runway” approach that assisted the banks and only a fraction of the homeowners that could have benefited – has been a failure and has left us stuck in economic mediocrity. Geithner wrote this week to Demarco: “You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis.” If only he had heeded his own advice.

You will be assimilated

I read this post by author Barry Eisler, and it reminded me of this.

I have a friend – several friends, actually – who have been invited to the White House. One in particular argues with me ever since I told him I would “never” go to the White House if I were invited. (By any president, not just this one.) He seemed to think I was grandstanding, but would backtrack if it ever actually happened.

“You don’t know me as well as you think you do,” I told him.

“So the president of the United States calls you up, says, ‘Susie, I want you and a handful of other bloggers to meet with me to talk about some current issues, I’d like to hear your thoughts,’ you wouldn’t go,” he said, scornful. “You wouldn’t want to tell your grandchildren you were invited to the White House.”

“Nope. Absolutely not.”

“I don’t believe you.”

I told him he forgot I’d been a reporter for 20 years, and that to me, this is just work, not ego fodder. I said I was very conscious of the power dynamic between journalists and politicians, and the only reason the president would want to talk to bloggers is if we presented a public relations problem – that the purpose of any meeting would be to make his positions more sympathetic to us, and thus mute our criticisms. “There would simply be no point,” I said. “That’s why you don’t have anything to do with people you cover.”

“So if I called and asked if you would go with me to the White House Christmas party, you wouldn’t go.”

“Oh, I would go to that,” I said.

“So you would sell out. What’s the difference?”

“First of all, I wouldn’t be the one invited – you would. I wouldn’t be there in any official capacity, so I wouldn’t be compromising my integrity. And I hear the food is really good.”

“So you’re a hypocrite. You’d go for one thing and not the other.”

“You’re not listening to me, and if you can’t tell the difference, I can’t explain it to you.”

We’ve had some variation of this conversation a dozen times, at least.

See, the big thing that I have going for me (and the thing that makes me a more candid blogger than most) is that I absolutely hate blogging. I hate having to follow all this depressing news, I hate seeing other bloggers rationalize things in this administration we attacked mercilessly in the last, and I hate how my day (and week) never ends. I hate how my hands and arms hurt all the time.

So when I know something, I tell you. I’m not worried about whether I’ll get invited on a White House conference call (haven’t been on one in two years, gee I wonder why?) or whether I get to go on MSNBC. (I assure you, I won’t.) What I will do is give you my best take on the news, tempered by my own journalism background, my circle of contacts and a brief but highly informative experience on a high-powered political campaign.

And because I have no ulterior motive, no goal other than trying to figure out what’s going on and how it will affect people like us, you will probably get a more accurate idea of what’s happening. I mean, sometimes I’m wrong or I just don’t have any relevant information, but if I don’t, I’ll tell you that, too.

If you’re someone who wants to know those things, I hope you continue to support me. It’s worth something.

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