Today, Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP -- in layman’s terms, the government’s watchdog over the
Today, Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP — in layman’s terms, the government’s watchdog over the program to stabilize the banking sector and housing market — released a quarterly report on how things are going. TARP programs did well to stabilize the banking sector, Barofsky says, despite incidences of fraud and other complaints.
But not so for housing. Barofsky blasts the Obama administration’s efforts as expensive, inefficient and useless at stemming the foreclosure crisis, also arguing that Treasury failed to set meaningful goals for itself:
Unfortunately, HAMP continues to struggle to achieve its original stated objective, to help millions of homeowners avoid foreclosure “by reducing monthly payments to sustainable levels.” Despite a seemingly ever increasing array of HAMP-related initiatives designed to encourage participation in the program, the number of homeowners being helped through permanent modifications remains anemic, with fewer than 400,000 ongoing permanent modifications…and HAMP has not put an appreciable dent in foreclosure filings. Indeed, the number of trial and permanent modifications that have been cancelled substantially exceeds the number of homeowners helped through permanent modifications.
One continuing source of frustration is that Treasury has rejected calls to announce publicly any goals or performance benchmarks for HAMP or its related initiatives concerning how many homeowners it actually expects to help stay in their homes, despite repeated recommendations that it do so from SIGTARP, the Congressional Oversight Panel and the Government Accountability Office (“GAO”).
**Instead, Treasury clings to its prior statements that it plans to offer trial modifications to three to four million homeowners, a measure that SIGTARP has previously shown to be essentially meaningless. Treasury’s refusal to provide meaningful goals for this important program is a fundamental failure of transparency and accountability that makes it far more difficult for the American people and their representatives in Congress to assess whether the program’s benefits are worth its very substantial cost. **
The American people are essentially being asked to shoulder an additional $50 billion of national debt without being told, more than 16 months after the program’s announcement, how many people Treasury hopes to actually help stay in their homes as a result of these expenditures, how many people are intended to be helped through other subprograms, and how the program is performing against those expectations and goals. Without such clearly defined standards, positive comments regarding the progress or success of HAMP are simply not credible, and the growing public suspicion that the program is an outright failure will continue to spread.
The report, which I will review in more detail later today, comes as the Obama administration starts its effort to reform housing finance, including Fannie Mae and Freddie Mac.
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