TARP IG rips Obama economic policy on housing

posted at 4:25 pm on March 24, 2010 by Ed Morrissey

With two straight days of bad news from the housing market, the timing couldn’t be any worse for Barack Obama to get Neil Barofsky’s report on TARP and foreclosures.  The Inspector General leveled harsh criticism at the White House and Treasury over their attempts to stem foreclosures, arguing that the new policies on loan modifications has done little but put off the inevitable:

The Obama administration’s $75 billion program to help homeowners risks failure by, “merely spreading out the foreclosure crisis,” a top government watchdog said Tuesday.

Neil Barofsky, the special inspector general over the $700 billion financial rescue package, slammed the administration’s housing program for having ill-defined metrics and for helping far fewer homeowners than originally proposed.

“The program risks helping few, and for the rest, merely spreading out the foreclosure crisis,” Barofsky said in a report. The program encourages companies to modify the terms of home loans so that borrowers can attempt to avoid foreclosure. Mounting foreclosures continue to weigh heavily on a weak housing market, which began declining more than three years ago.

Obama bragged that the program would help between three and four million distressed homeowners.  So far, though, it has only resulted in 170,000 permanent home-loan modifications, far below the rate necessary to stabilize the lending market.  Nor does Treasury actually rely on that metric, preferring to track temporary modifications instead, which explicitly postpone the day of reckoning for homeowners that can’t afford their mortgages.

In response, Treasury claimed that Barofsky uses the wrong metric, too:

Herbert Allison, assistant Treasury secretary, defended the program in a letter, and said the program’s success, “should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing.”

“Transitioning with dignity to more suitable housing”?   That’s an interesting goal, one not exactly proclaimed by the Obama administration when it demanded the $75 billion in taxpayer money to conduct the program.  Homeowners can transition to more suitable housing without a $75 billion government program by taking responsibility for their own decisions in purchasing their houses, especially if they bought “unsuitable” housing in order to put themselves in this position.

That’s also true about loan modifications.  If a mortgage can be rescued through loan modification, lenders already have an incentive to reach new agreement with borrowers to modify the mortgages.  If not, no amount of government intervention will help, save buying up the paper and forgiving part or all of the loan.  Of course, that’s originally what TARP intended to do — buy up bad mortgage-backed securities (MBS) off of the market and provide a cushioned landing for the market, as well as stabilizing some of the derivative markets.  That would have given the government more latitude in dealing with modifications.  Instead, the Bush and Obama administrations used TARP as a blank check to bail everyone else out.

Clearly, Obama’s economic policies are not working.  Barofsky merely confirms what the past several months of housing sales already made obvious.


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Comments

has done little but put off the inevitable:

Pretty much the definition of socialism

MarkTheGreat on March 24, 2010 at 4:28 PM

Who cares about the housing market, the dems passed Zerocare and it’s helping the children. It’s the children that’s all that matters. Oh wait…

Brat4life on March 24, 2010 at 4:29 PM

Tax And **** the Public.

percysunshine on March 24, 2010 at 4:30 PM

Herbert Allison, assistant Treasury secretary, defended the program in a letter, and said the program’s success, “should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing.”

Yes because nothing symbolizes dignity more than losing your home, destroying your credit, and moving into an apartment.

Doughboy on March 24, 2010 at 4:30 PM

Here’s the deal homeys:

Someone making $40K a year cannot live in a $500K house. All the loand modification programs in the world won’t help. You might as well try to modify the effects of gravity while you’re at it.

angryed on March 24, 2010 at 4:30 PM

Anyone for a double dip recession, or is that depression now?

MarkTheGreat on March 24, 2010 at 4:30 PM

In response, Treasury claimed that Barofsky uses the wrong metric, too:

They should be using Obama math too. That’s where the screwed up. If Barofsky used the right math there wouldn’t be any problems at all.

Brat4life on March 24, 2010 at 4:32 PM

Stupid is as stupid does. Unfortunately Obama is also a communist … a stupid communist.

darwin on March 24, 2010 at 4:33 PM

I want to help Obama transition to more suitable housing, though not with dignity.

Mark1971 on March 24, 2010 at 4:33 PM

So is the new metric “dignity saved or created”?

rw on March 24, 2010 at 4:33 PM

Anyone for a double dip recession, or is that depression now?

MarkTheGreat on March 24, 2010 at 4:30 PM

In today;s world spending $1T on a new entitlement leads to lower deficits.

So using that kind of new math, lower economic activity really means a growing economy.

angryed on March 24, 2010 at 4:33 PM

Homeowners can transition to more suitable housing without a $75 billion government program by taking responsibility for their own decisions in purchasing their houses, especially if they bought “unsuitable” housing in order to put themselves in this position.

Okay, but let’s no forget that the housing crisis began before the unemployment problem we are now experiencing (indeed, it was the cause of the economic collapse). If you lose your job and can’t find another one it’s hard to pay the mortgage, so we should be careful not to trash everyone for being irresponsible or living beyond their means.

This housing situation is going to get worse and worse and there is nothing that the TARP program or any federal program can do to fix it other than set up conditions which allow for private sector job growth – which is not going to happen with Obama and the Dems in control.

Buy Danish on March 24, 2010 at 4:33 PM

I hope they’re making room under that incredible magic bus for another IG.

hillbillyjim on March 24, 2010 at 4:33 PM

Suitable housing was once 4 walls and a roof. Now you must have it all.. A/C, 3 car garage, 3k+ ft, spa bathrooms, etc.

I guess the government think we should all be in mcmasions, even if we dont’ wanna be in one.

upinak on March 24, 2010 at 4:34 PM

Someone making $40K a year cannot live in a $500K house. All the loand modification programs in the world won’t help. You might as well try to modify the effects of gravity while you’re at it.

angryed on March 24, 2010 at 4:30 PM

But … but … but, Obama promised me housing justice.

darwin on March 24, 2010 at 4:34 PM

Obama’s inexperience is showing, like a 15 year old with a learner’s permit thinking he can pilot an aircraft carrier. He’s ignoring the warnings from the people who know better.

Who said the adults were in charge now?

AubieJon on March 24, 2010 at 4:34 PM

I am sure the lamestream media will be all over this.

*crickets*

evie on March 24, 2010 at 4:35 PM

Silver lining: 2011 and 2012 another great period to buy housing at affordable prices.

Lockstein13 on March 24, 2010 at 4:35 PM

It’s not a bug – it’s a feature. HAMP was always intended to spread out the foreclosure crisis for the benefit of the banks. It’s a way for the banks to avoid dumping too many properties on the market at once and thereby depressing housing prices even further.

Ted Torgerson on March 24, 2010 at 4:36 PM

Yeah..it’ll help 3-4 million homeowners with foreclosure….it’ll help them foreclose faster…

PatriotRider on March 24, 2010 at 4:38 PM

With the falling value of homes it is almost impossible to refinance, every time you get within the 20% equity mark, the value of your home drops and you end up even further under water.

fourdeucer on March 24, 2010 at 4:38 PM

Where is the $75b dollars that was put into this program? Where are those funds, and who will audit this program?

Oh, that’s right…. Uncle Joe. We’re in the best of f***g hands.

Key West Reader on March 24, 2010 at 4:38 PM

someone tell me: won’t spreading–actually postponing this crisis make it worse?

what the hell. we get free healthcare & that is all that matters.

kelley in virginia on March 24, 2010 at 4:38 PM

New Cash for Trailers program coming soon…

PatriotRider on March 24, 2010 at 4:39 PM

In response, Treasury claimed that Barofsky uses the wrong metric, too:

The correct one was whether or not Henrietta finally got her new kitchen.

sherry on March 24, 2010 at 4:39 PM

Breaking: Neil Barofsky committed involuntarily for dementia and ‘erratic’ behavior.

Monica on March 24, 2010 at 4:40 PM

New Cash for Trailers Tents program coming soon…

PatriotRider on March 24, 2010 at 4:39 PM

PatriotRider on March 24, 2010 at 4:40 PM

Thanks for making this a feature article, Ed. I got this report early this morning and nearly threw up.

Many people forget that the beguinning of the Tea Party movement was the announcement last February of this homeowner-bailout program, and Rick Santelli’s reaction to it on CNBC. Now we find out what most of us knew back then – it isn’t working.

rockmom on March 24, 2010 at 4:40 PM

The best part about Obama’s Tarp BS for housing is that he has pushed the inevitable date closer to running for re-election. How in the hell is he going to spin the awful economy in a positive light, come Sept, Oct, Nov for the Dems running for House & Senate. By that time, who is going to believe that he wants what’s best for the country so that he can run for re-election.

The Democrats are stupid, but they can’t be that stupid.

PappaMac on March 24, 2010 at 4:40 PM

Oh, and PS, if you do one of the Obama Loan Mod programs? You take a hit to your credit rating even though you never miss a payment…

Little hidden gem there…

Romeo13 on March 24, 2010 at 4:40 PM

Lockstein13 on March 24, 2010 at 4:35 PM

Unless, of course, you have two houses you want to sell.

Cindy Munford on March 24, 2010 at 4:41 PM

arguing that the new policies on loan modifications has done little but put off the inevitable

Why is that bad news for Obama? From what I can tell, anything that extends the recession is, from the perspective of the White House, working as intended.

malclave on March 24, 2010 at 4:42 PM

Clearly, Obama’s economic policies are not working.

Well, if you assume they were meant to help America.

MB4 on March 24, 2010 at 4:42 PM

new policies on loan modifications has done little but put off the inevitable:

Not true. It also spent a bunch of Uncle Sam’s borrowed money, requiring us to collect revenue to repay that money with interest.

hawksruleva on March 24, 2010 at 4:43 PM

Someone making $40K a year cannot live in a $500K house. All the loand modification programs in the world won’t help. You might as well try to modify the effects of gravity while you’re at it.
angryed on March 24, 2010 at 4:30 PM

Gravity? That’s Al Gore’s next project…

joejm65 on March 24, 2010 at 4:45 PM

Is it suppose to make everyone happy that Treasury says the IG is using the wrong metric which I read as “math”? And when the government is borrowing billions/trillions of money I don’t really want to see the words pain, stigma and dignity. Sorry I don’t like to mix emotion with dollars, I never win with that combination.

Cindy Munford on March 24, 2010 at 4:45 PM

0 is destroying this great country of ours. DAMN the SOB to HELL!

OmahaConservative on March 24, 2010 at 4:46 PM

Obama bragged that the program would help between three and four million distressed homeowners. So far, though, it has only resulted in 170,000 permanent home-loan modifications, far below the rate necessary to stabilize the lending market.

If you fudge the number of permanent home-loan modifications (170,000) by nearly 3000%, then you can see how Obama would come up with the figure of 4 million, give or take a million for government rounding errors.

VibrioCocci on March 24, 2010 at 4:47 PM

someone tell me: won’t spreading–actually postponing this crisis make it worse?

what the hell. we get free healthcare & that is all that matters.

kelley in virginia on March 24, 2010 at 4:38 PM

In all likelihood, yes. Business can ride out a temporary downturn. But the longer we stay near the bottom of the recession, the more companies begin to be seriously affected by losses. Think of money as the lifeblood of a corporation. The business can withstand a cut, or even a gash, as long as it’s fixed in time. But continued losses over a long period of time? That seriously lowers the chance for a firm to survive.

From a psychological standpoint, a resumption of rough times in the housing market will scare consumers into saving, lowering consumer spending. It’ll make companies less likely to hire. And it’ll make everyone wary of the next announcement that “the worst is behind us.”

hawksruleva on March 24, 2010 at 4:48 PM

I think its laughable to qualify anything the Obama administration has produced as “economic” policy. Its all a means to their socialist ends.

Failure is the only possible outcome when you use socialist fantasyland utopian laws of economics to make decisions anyway.

http://alecsavestheworld.blogspot.com

alecj on March 24, 2010 at 4:48 PM

What is all this about metrics? That’s the problem. Guys this is America. We don’t use the metric system.

Rocks on March 24, 2010 at 4:48 PM

I tried to modify my mortgage through Obamas …the bank (Chase) was uncooperative, threw every roadblock in front of me in terms of paperwork, stalled, and asked me to resubmit the same paperwork 3 times claiming I needed more current information.

I gave up in frustration after ripping the bank ***wipe another one.

rickyricardo on March 24, 2010 at 4:48 PM

angryed on March 24, 2010 at 4:30 PM

I have met two people in the past couple of months who swear that they did not discuss their mortgages at their recent home closings. People are amazing.

Cindy Munford on March 24, 2010 at 4:50 PM

0 is destroying this great country of ours. DAMN the SOB to HELL!

OmahaConservative on March 24, 2010 at 4:46 PM

Take heart. A nation is note a collection of homes. It’s a group of people. No matter how much economic damage is done, it’s the will of the people that matters. And many Americans have a funny way of reacting to adversity. They embrace traditional values and use more common sense.

hawksruleva on March 24, 2010 at 4:50 PM

Tax And **** the Public.

percysunshine on March 24, 2010 at 4:30 PM

Tax and AnninCAing Rape the Public.

Get it right.

Holger on March 24, 2010 at 4:52 PM

New Cash for Trailers refrigerator boxes program coming soon…

PatriotRider on March 24, 2010 at 4:39 PM

FIFY :(

Mini-14 on March 24, 2010 at 4:55 PM

Gravity? That’s Al Gore’s next project…

joejm65 on March 24, 2010 at 4:45 PM

Yep…he wants to lose weight but doesn’t want to go on a diet.

The unintended consequence of this will be that all of Michelle Os anti-fat initiatives will grind to a halt.

Barry will not be pleased.

BobMbx on March 24, 2010 at 5:00 PM

angryed on March 24, 2010 at 4:30 PM

Don’t you understand that the shortfall will be made up from Øbama’s stash?

Kafir on March 24, 2010 at 5:02 PM

“Clearly, Obama’s economic policies are not working.”

Yes they are…

… Every thing this Marxist/Socialist Social Engineering American Hating walking piece of maggot sh%t is doing is by design.

Seven Percent Solution on March 24, 2010 at 5:03 PM

I have met two people in the past couple of months who swear that they did not discuss their mortgages at their recent home closings. People are amazingly good at lying.

Cindy Munford on March 24, 2010 at 4:50 PM

FIFY.

I just don’t buy the ‘oh dear me, I was duped by some mortgage broker’. BULLS**T. These people thought real estate was like winning the lottery and they’d sell the house for 200% profit in 3 months.

They knew exactly what they were getting into.

angryed on March 24, 2010 at 5:04 PM

Shuffling the deck chairs on the Titanic.

spmat on March 24, 2010 at 5:04 PM

I tried to modify my mortgage through Obamas …the bank (Chase) was uncooperative, threw every roadblock in front of me in terms of paperwork, stalled, and asked me to resubmit the same paperwork 3 times claiming I needed more current information.

I gave up in frustration after ripping the bank ***wipe another one.

rickyricardo on March 24, 2010 at 4:48 PM

You bought the house and signed the papers. Chase has these people called stockholders. We don’t feel like paying the balance of your mortgage agreement.

katy the mean old lady on March 24, 2010 at 5:08 PM

I tried to modify my mortgage through Obamas …the bank (Chase) was uncooperative, threw every roadblock in front of me in terms of paperwork, stalled, and asked me to resubmit the same paperwork 3 times claiming I needed more current information.

I gave up in frustration after ripping the bank ***wipe another one.

rickyricardo on March 24, 2010 at 4:48 PM

Chase actually expects you to pay back the money they lent you?!?!?

Those bastards!!

angryed on March 24, 2010 at 5:10 PM

From a psychological standpoint, a resumption of rough times in the housing market will scare consumers into saving, lowering consumer spending. It’ll make companies less likely to hire. And it’ll make everyone wary of the next announcement that “the worst is behind us.”

hawksruleva on March 24, 2010 at 4:48 PM

Its the exact method the liberal MSM uses to attempt to direct the economy into a slump every time a republican president is elected. The very next day, the stories begin about how bad the economy is… waaaah… waaaaah.

ROCnPhilly on March 24, 2010 at 5:13 PM

angryed on March 24, 2010 at 5:04 PM

I don’t know what to think. I know that a first time buyer can be intimidated by the process but it isn’t as if closing is the first time you hear about the the terms of the loan. One of the people got one of those stupid 5 year ARM’s and later told how she had been talked into leasing a car. She probably should stop wearing that SUCKER t-shirt.

Cindy Munford on March 24, 2010 at 5:13 PM

Take heart. A nation is note a collection of homes. It’s a group of people. No matter how much economic damage is done, it’s the will of the people that matters. And many Americans have a funny way of reacting to adversity. They embrace traditional values and use more common sense.

hawksruleva on March 24, 2010 at 4:50 PM

And vote for Obama, Pelsoi, Reid, Durbin, Stupak…..

For all the complaints about the Dems, everyone seems to forget that people elected them to office to do just what they’re doing. Enough with all this talk about Glorious Americans out in the fields. Most Americans are lazy, brain dead morons who will vote for the person who offers them the most shiny beads and has the coolest slogans.

angryed on March 24, 2010 at 5:13 PM

What did he expect? More empty houses, for government to snatch up, and hand to all those who are going to benefit from free health care. Cause after all…..it’s a right to have a home…and by golly some people are going to get one.

capejasmine on March 24, 2010 at 5:19 PM

Well, actually, the $75bln went to ACORN, who’s now bankrupt, and is opening a new Obama’s R Us store, full of exciting memorabilia from his first of many terms in office. ACORN will be building their new headquarters next to the Obama Presidential Library and Adnauseum in Chicago. Little Timmy Geitner will give the guided tours of the Obama Memorial Bank Vault. All this will be in a complex next to the Reid/Pelosi Wax Museum (you’ll think it’s the real thing!)

Robert17 on March 24, 2010 at 5:32 PM

Robert17 on March 24, 2010 at 5:32 PM

Will they sell hats with Obama ears on the sides? Ala Mickey Mouse? Will they embroider your name on it? LOL

capejasmine on March 24, 2010 at 5:44 PM

Look’s like it’s all going to plan for Barry. Cloward and Piven stategy , system slowly collapsing.

Sandybourne on March 24, 2010 at 5:45 PM

Clearly, Obama’s economic policies are not working.

Oh, gee! “Take from the rich and give to the poor” doesn’t work as economic policy. Hmmmmm……I thought everyone with a brain knew that.

GarandFan on March 24, 2010 at 6:18 PM

3-4 million versus 170,000?

That Omath for Dummies.

(Named Barry the Boy King and Joey Fuggs.)

profitsbeard on March 24, 2010 at 6:47 PM

Keep the crisis going…stretch it out…keep the people down…SAUL ALINSKY PLAYBOOK, PAGE 1.

NEVER LET A CRISIS GO TO WASTE!

Cleveland Steamer on March 24, 2010 at 6:50 PM

The census done this year will be pretty meaningless once people start having to migrate to Obamavilles by viaducts and on vacant roadside property. That will, of course, be hailed as a great thing by the Administration having transferred such people with dignity to absolute poverty. And with Obamacare he will seek to do a lot of similar dignity transfers in the near future.

ajacksonian on March 24, 2010 at 6:59 PM

I refinanced last year a house I bought in 2008. I was not in trouble and had never made a late payment. I just got a call from the mortgage broker I used in 2008 and he told me Obama had passed a law and to call the bank to get a new loan at a lower rate. So I did. Saved $500 a month. I wonder if I am one of the 170,000. And if so, I also wonder if many of the others in the 170,000 were people like me who did not need help but got 1.25% off a mortgage. If so, it makes the statistic and the cost of it even more ridiculous.

HawaiiLwyr on March 25, 2010 at 2:49 AM

I want to help Obama transition to more suitable housing, though not with dignity.

Mark1971 on March 24, 2010 at 4:33 PM

We have a WINNER! HA!!

leftnomore on March 25, 2010 at 3:55 AM

Most Americans are lazy, brain dead morons who will vote for the person who offers them the most shiny beads and has the coolest slogans.

angryed on March 24, 2010 at 5:13 PM

Exactly. We got O-Care and more in November, 2008. We had the chance to hold our nose and vote for McCain, but didn’t. Can’t say I blame everyone for that choice, but this was all waiting for us once the Maoists were safely elected.

leftnomore on March 25, 2010 at 3:59 AM

merely spreading out the foreclosure crisis

…like dog sh!t on the carpet.

Terp Mole on March 25, 2010 at 9:12 AM