No News Is Good News

Unfortunately, the News Keeps Coming.

Shelia Bair
FDIC Chairman Shelia Bair testifies before the House Financial Services Committee's Financial Institution and Consumer Credit Subcommittee on Capitol Hill on May 26, 2011.
Chip Somodevilla / Getty Images
Different day, different topic, same shit. This time it's the foreclosure crisis - remember that one? ProPublica (an actual bright spot in today's media) has a blog post taking off from "Outgoing Federal Deposit Insurance Corporation Chairwoman Sheila C. Bair's revealing exit interview by the New York Times' Joe Nocera" (Nocera is yet another media bright spot, one more and it'll be a trend).
Bair said that the mortgage's industry's reluctance to provide mortgage modifications stems in part from the industry's "disdain for borrowers."

"I think some of it was that they didn't think borrowers were worth helping," she said.

While Bair said that President Barack Obama's "heart is in the right place," she criticized his economic team for taking controversial steps to aid banks while, in Nocera's words, being "utterly unwilling to take any political heat to help homeowners."

We have been tracking Obama's struggling home loan modification program since 2009. Bair's analysis of the government's approach is very much in line with what we've reported. From the beginning, the program was watered down and stripped of key enforcement measures, after President Obama backed away from his campaign promises to force banks to modify mortgages. Treasury's oversight of the program has been lax and characterized by deference to banks.

The government has only recently begun to penalize several major banks for their byzantine, error-prone modifications. As we've reported, homeowners have often been forced to deal with lost documents, poor communication and mistaken denials. As of May, approximately 730,000 homeowners had received permanent loan modifications—a fraction of the millions of homeowners that the Obama administration promised to help.

In criticizing the industry's approach, Bair became the first regulator to speak so frankly about the issue.
The first regulator to speak so frankly about the issue? WTF!?! How in the world are we supposed to control financial interests if even the regulators don't speak frankly? *

As for President Barack Obama, the full quote from the Nocera piece is this:
“I think the president’s heart is in the right place,” Bair told me. “I absolutely do. But the dichotomy between who he selected to run his economic team and what he personally would like them to be doing — I think those are two very different things.” What particularly galls her is that Treasury under both Paulson and Geithner has been willing to take all sorts of criticism to help the banks. But it has been utterly unwilling to take any political heat to help homeowners.
Why does she think the President's heart is in the right place? There is absolutely no evidence that personally (what does that even mean?), Obama wants his team to help the little people. It reminds me of how people think God is looking out for them, all evidence to the contrary.

But that's a small criticism, and a personal one at that. Her heart is certainly in the right place: "I’ve always thought, that it was really important for everybody to have to play by the same set of rules." When exactly did this become a radical statement?

* Elizabeth Warren doesn't count, because she isn't a regulator yet. [UPDATE: Now she won't be either.] If the GOP gets its way, she never will be one either. Even more digression, with Brooksley Born, the top three people in government to fight for economic stability and families were all women. Which guy comes even close to these three Financial Angels?
Financial AngelsHey, that's the third bright spot, including three people! Three is a magic number!

UPDATE: Robert Scheer weighs in, Sorry Elizabeth, Wall Street Said No,, July 19, 2011.

More Nocera, "The Travails of Elizabeth Warren" New York Times, July 22, 2011.