The Administration’s po-faced insincerity on the mortgage crisis front is wearing thin now that other authorities are taking action against the worst abuses.
Yesterday, we had the sorry spectacle of Treasury Secretary Timothy Geithner, under questioning by Congressional Oversight Panel commissioner Damon Silvers, maintain that the Treasury really had very little power to require banks to engage in certain types of behavior under the Treasury mortgage modification program, HAMP (see the testimony starting at 101). Silvers made it quite clear that he did not buy Geithner’s claim. If you think I am reading more into Geithner’s response than is warranted, he had a longer form discussion with a small group of bloggers last August and made a similar argument when asked why Treasury had done nothing when servicers were clearly gaming HAMP. I pointed out that there was a big difference between narrow authority and broad authority, and pointed out that Treasury had lots of leverage over banks, starting with REMIC violations. He pointedly ignored the REMIC issue.
So we now have the spectacle of two state attorney generals who see mortgage modification abuses large and persistent enough to warrant filing lawsuits against Bank of America. And both their press releases and media reports on the lawsuits (sadly, the filings themselves do not yet appear to be online) make clear that some of the alleged violations took place in connection with HAMP.
So why is Treasury playing what amounts to “see almost no evil, hear almost no evil, see almost no evil” as far as HAMP in particular and banks in general are concerned?
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