If you’re a big fan of revisionist history and want to read more government spin on the financial crisis that triggered a multi-billion-dollar foreclosure frenzy, ex-Treasury Secretary Timothy Geithner’s new book is just the thing for you. Here are some excerpts as reported by the Wall Street Journal.
On a silver-bullet for the foreclosure crisis:
“Housing was an impossibly complex issue that didn’t lend itself to simple solutions, and the limitations of our housing programs were a lot easier to identify than they were to fix. We were under intense pressure to improve these programs—not only from our many critics, but from the President, who was deeply unsatisfied with our early results, and constantly pushed us to do better… We were dissatisfied and frustrated, too. Some of our programs were stumbling out of the gate. Others weren’t ambitious enough. We would keep looking for ways to expand their power, reach, and effectiveness throughout the president’s first term.
“If there had been a game-changing housing plan that could have provided much more relief, we would have embraced it. We had some of the nation’s best progressive talent working on housing. We also had powerful incentives to throw everything we had at the problem; the press was killing us and so were our political allies… We tried to do what we could within the constraints we faced. It wasn’t enough. But it was more than most people realized.”
On the shortcomings of the Home Affordable Modification Program, or HAMP, the administration’s primary mortgage-relief campaign:
“We ended up requiring a mountain of paperwork for permanent relief, in part to appease critics such as [Neil] Barofsky, [the special inspector general for the $700 billion Troubled Asset Relief Program] who warned that the limited safeguards in our initial proposal were an invitation to fraud; we decided that in this case he had a point. But Larry [Summers, the director of the White House National Economic Council] warned that we were so worried about “false positives,” providing aid to the underserving, that we would allow too many “false negatives,” denying aid to the deserving. He had a point as well….
“By [late 2009], it was clear that HAMP’s reliance on the broken infrastructure of the mortgage servicing industry was a serious problem. This was probably unavoidable; we didn’t have the authority to start up a new government agency or hire thousands of loan specialists ourselves, and even if we’d been able to get the authority from Congress, it would have been a long and messy process. But the servicers, many of them owned by the banks, had little experience modifying loans, and nowhere near the capacity or the resources they would need to modify millions of loans. They had been completely unprepared for the housing crisis, and had laid off staff in droves after the bubble popped.
Now we were asking them to conduct a challenging and time-consuming form of triage, and they were terrible at it—slow to hire, slow to figure out how to provide relief, just slow. In fairness, many of the borrowers they were supposed to track down were hard to find and harder to engage; homeowners also struggled to find every required document. But many times incompetent servicers found ways to lose those documents multiple times….”
What a load of crap former Treasury Secretary Timothy Geithner is spewing in his newly released book. No surprise he’s trying to re-write history: millions of Americans lost their homes completely unnecessarily because of his inability (unwillingness?) to make his Wall Street cronies at the big banks follow the very specific guidelines for modifying mortgages that were supposed to drive the Home Affordable Mortgage Program (HAMP).
HAMP wasn’t a perfect program by any means, but if it had been implemented in any meaningful way a whole lot of people would have kept their homes. All Geithner’s department and the other agencies tasked with oversight had to do was bring the banks to heel and get them to comply with the guidelines of the program, something that should have been within his power (for all he protested it was not). The “carrot” built in to the federal program was miniscule – small amounts of money offered for banks who followed the guidelines and completed what should have been fairly straightforward re-structuring of mortgage loans. (Lower the payments by decreasing the interest rate for a few years, extend the term of the loan and add a balloon payment on the end. Pretty standard stuff.) But the “stick” should have been huge: comply with the guidelines or don’t get bailed out. Fail. Simple as that.
But over and over Geithner and the other regulators failed to act in the interest of the American people and instead caved and waffled and,
eventually after years of blatant lies and fraud, negotiated some anemic and highly ineffective “punitive” settlements.
It’s not as if Geithner didn’t know the banks were running a big scam in the name of HAMP. How many letters do you suppose the Treasury Department got from homeowners detailing the now-familiar story of people trying for months and, eventually, years just to get the banks to
acknowledge that the proper paperwork had been submitted for review. I played the paperwork game with Wells Fargo for two years, sending the same forms over and over and waiting nearly eight months for one of the modification reviews to be complete (even though the HAMP guidelines specified the review take no longer than 30 days.)
I didn’t write to the Treasury Department, but a letter I wrote to President Obama in November 2010 got routed there in July 2011, presumably because Treasury was supposed to be overseeing HAMP. This referred me to a division of Fannie Mae (then tasked with administering the modification program) called the HAMP Solution Center, which resulted in a fake “investigation” of my allegations against loan services Wells Fargo and “investor” Freddie Mac. The staff of the Solution Center asked me no questions and gathered no data or facts other than my initial letter. I’m quite convinced that all they did was ask Freddie Mac whether Wells Fargo had done what it was supposed to in my case. (Or at least they said they asked; I got copies of no such correspondence.) Big surprise, Wells Fargo reported that it had complied in every way with the program and said the delays were all my fault because I just kept failing to send them paperwork on time (Big LIE!) and I didn’t qualify for HAMP (LIE!). The Solution Center took that as read and blew me off, as subsequently did the Treasury Department. The message to my bank: just keep on lying and cheating and we’ll just go on looking the other way.
Bankster apologist Geithner talks about the “broken infrastructure” of the mortgage servicing industry as if the poor banks just didn’t have the
resources to process all those re-structuring requests. But the same banks managed to originate all those mortgages – even at the height of the home-buying frenzy – without whining about being overwhelmed and under-staffed. Re-structuring those existing loans shouldn’t have required nearly as complicated a system as the origination. (If you’ve ever bought property, you know all the paperwork and logistics involved.) To modify a mortgage per the HAMP program guidelines all they really had to do was verify income eligibility, something institutions tasked with loaning money have been doing as long as there have been such institutions.
Create a system, teach the system to staffers assigned to the task, publicize the exact steps applicants need to follow and get on with
business. That’s assuming, of course, that you honestly intend to re-structure these loans. However, I know for certain that the big banks
never, ever intended to comply with HAMP. How do I know this? Simple. The banks never designed nor shared such a system. You could scour the websites of these big banks for weeks and still not find anything as simple as a checklist for what documents needed to be submitted before a HAMP review could commence and what the timeline for said review would be. And if you called your loan-servicer bank and spoke with one of the (mostly) polite but completely useless customer service people to whom your call was routed, they couldn’t tell you this information, either. (Nor were they allowed to tell you who was doing the review or how to contact that person or pretty much anything else of substance that a company engaged in honest business would openly provide.)
What the banks did instead was develop a system to string along their borrowers, to generate who-knows-how-many millions in “servicing”
fees while also extorting more money out of homeowners with a scam known as a “trial modification.” And in a grand stroke of coincidence, each and every one of the big banks seemed to come up with many of the exact same strategies for this, the best known of which was (and still is) the endless paperwork game. Send the same paperwork over and over and over and be told it’s lost or wrong or, my personal favorite, “stale.” On sites like HissingKitty and RipoffReport you can read thousands of accounts from homeowners seeking loan mods from Wells Fargo, Chase, Bank of America, Citi and all the little subsidiaries and the stories pretty much follow the same line. Loan mod scam with concurrent foreclosure process (the deadly “dual track“) proceeding with the force of a freight train and nothing – not logic, not the law, not ethics or morals or compassion or even the fact that the person being persecuted didn’t hold a mortgage – could stop the engine.
Pure chance or do you think the banks got together and conspired to create a system to thwart the mortgage loan re-structuring program and defraud millions of homeowners out of their property? I for one believe they gleefully shared their stalling strategies as they developed, including that extremely expedient forgery system that became known as “robo-signing.”
And all of this happened on Geithner’s watch and with Geithner’s full knowledge. Anyone with a brain realizes this. To the banksters that
makes him a hero, part of the mechanism that yielded them six-figure bonus checks while the average American was struggling to stay above
water. To those of us who were lied to and jerked around by those banksters, he’s one of the evil conspirators, someone who could have
stopped the foreclosure feeding frenzy and did not.
I’m not saying it was his decision to chose inaction over doing anything substantial to turn the tide of foreclosures. I firmly believe the fault for
that lies with the Obama administration, which either implicitly or explicity blocked every agency that could have prevented the big fee-crazy
mortgage servicers from raping and pillaging millions of homeowners. But with his close relationship to the Wall Street fat cats, it’s easy to imagine his natural inclination led to favoring the corporate cash grab over the little guys defending their homes.
So of course he’s out there hawking his revisionist history and disparaging anyone still calling for justice for the millions Americans who had the rug pulled out from under them by a financial crisis not of their making and who lost homes not because there wasn’t a “silver bullet” to stop
foreclosures but because men like Timothy Geithner conspired against them with the very people who did cause the crisis and who were
getting rich off its fallout.