More from the Old Boys' Network?
Just as we were celebrating the lifting of the mysterious anonymous hold on the nomination of Neil Barofsky to be Special Inspector General for the bailout...you heard it here first, folks!...suddenly some cold water was thrown in our faces.
Bloomberg is reporting that Timothy Geithner, Obama's pick as next Treasury Secretary, is already trying to get rid of the one senior financial official who has actually been trying to do something about the underlying issue of mortgage modifications. Sheila Bair, head of the Federal Deposit Insurance Corp., has “repeatedly pushed Fed and Treasury officials to boost aid for homeowners.” In fact, as Senate Banking Chairman Chris Dodd recently pointed out, since early 2007 Bair has been pushing to use FDIC funds to back up banks willing to renegotiate mortgage loans with struggling homeowners.
However, according to Bloomberg, Geithner has decided that Bair “isn't a team player and is too focused on protecting her agency rather than the financial system as a whole.” Why is it that the boys always use sports metaphors? And why is it that in Washington it's such a badge of shame to be tagged as “not a team player”?
It puts us in mind of the saga of Brooksley Born. In the 1990s, Born was head of the Commodity Futures Trading Commission and kept insisting that these new creatures, derivatives, needed to be regulated. But the big boys back then--Treasury Secretary Robert Rubin, Fed Chairman Alan Greenspan, SEC Chief Arthur Levitt--all insisted that she was wrong, that the magic of the marketplace was regulator enough. Ultimately they beat her black and blue and pushed her out of her job. Now of course she's recognized as the Cassandra of the financial wipeout--the person who was correct but not believed.
And funny enough, we now have Geithner, a former disciple of Rubin, joining outgoing Treasury Secretary Henry Paulson and current Fed Chairman Ben Bernanke in beating up on the latest girl who dared to step out of line.
In a related development, we are glad to see that Paulson is finally considering addressing the underlying issue of mortgages. Never too late to wake up and smell the coffee, Hank. According to Bloomberg again, and also the Washington Post, Treasury is “considering” a plan to step up purchases of Fannie Mae and Freddie Mac mortgages, to pump up the market and reduce mortgage rates. The Post says that for mortgage lenders to participate, they'd have to agree to charge “exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans.”
The Post further reports that in mid-November, Treasury officials told members of the National Association of Realtors that such a plan “could be a more effective way to help homeowners than focusing efforts solely on borrowers who are struggling to meet their monthly payments.” Apparently these clever but anonymous Treasury officials “suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.” I guess that's why it's taken a while to catch on. But despite their clever lobbying campaign, the Post reports, “the officials”--apparently with straight faces--also “expressed concerns yesterday that premature disclosure of the plan could prompt Americans to put off buying homes and hold out for a better rate.”
But here's the rub. According to the Post, the Treasury plan is Paulson's alternative to Bair's proposal. Paulson is concerned that Bair's plan “would reward borrowers who bought houses they couldn't afford.” So does Paulson only want to offer mortgages to the rich folks, in the way his bailout so far has only helped Wall Street fat cats?
Not to be outdone, in today's New York Times, Bernanke also is quoted as saying it's time to help the homeowners. I know I'm just a girl, but isn't housing and the mortgage market where all the trouble began? Hello?
Meanwhile, GAO has released testimony by Mathew J. Scire, director of its office on financial markets and community investment, that updates a 2007 report on default and foreclosure trends for home mortgages. Sadly, the rate is now 4 in every 100 mortgages either in foreclosure or over 90 days late--“the highest reported in the 29 years since the Mortgage Banks Association began keeping complete records and are based on its latest available data.” Scire's testimony underscores a point made in the GAO's first TARP report released yesterday, which we had found particularly troubling: that “Treasury has not yet determined if it will impose reporting requirements on the participating financial institutions, which would enable Treasury to monitor, to some extent, whether the capital infusions are achieving the intended goals.”
As for the Special IG, it looks like the Senate will have something for the House to consider very soon, in regard to both emphasizing that the Special IG's authority extends to any and every use of the $700 billion, and in allowing him to jumpstart the hiring of staff by being able to waive the usual civil service requirements. We are hopeful that SIG TARP Neil Barofsky will be confirmed very quickly now that the mystery hold has been lifted, and that he will be able to (ahem) hit the ground running.
-- Beverley Lumpkin
Why introduce a charge of sexism where it is not an issue, deflecting attention from real problems. If you think Paulson's problem with Bair's idea on a mortgage bailout program is sexism, rather than a product of his ignorance, what is the evidence?
And don't the women at POGO show any benefits from decades of Title IX. The big girls one encounters in Washington--many of them--are as full of sports metaphors and sports interests as the guys. Don't mess with them. You're over-reaching on this.
Anyway, Geithner went to Dartmouth, and that explains any backward thinking (just kidding).
Posted on: Dec 05, 2008 at 04:08 PM