How HAMP Makes Elizabeth Warren The Only Choice For Consumer Protection
Thursday, 07/22/2010 - 5:19 pm by Mike Konczal | One Comment
No one else has been a stronger advocate for public disclosure.
There’s a debate going on about who should be nominated to run the Consumer Financial Protection Bureau at the Federal Reserve. One side says Elizabeth Warren, while another says someone from Treasury, likely Michael Barr.
At a quick glance you might not see a big difference. As Felix notes, Michael Barr is very strong on consumer finance.
But I think Warren would be a far superior choice. There are many reasons why, but I want to discuss a very specific one here that distinguishes her from anyone in Treasury. The biggest: she is a strong critic of HAMP, Treasury’s largest intervention into the massive foreclosure crisis hitting millions of regular Americans, and she demands accountability on behalf of the people.
HAMP As Failure
The Home Affordability Modification Program is widely considered to be a failure. Here is Shahien Nasiripour reporting on the latest numbers from June. They haven’t remotely hit the numbers they projected. Homeowners continue to suffer from a lack of modifications due to servicer problems and the overvaluation of their books. I wrote here about how the creator of the mortgage bond instrument in the early 1980s said in 2007 that a major market failure was coming. There was need for government action.
HAMP is such a failure that it is a bit of a game among the financial bloggers as to who has the best write-up of how bad it is each month and what the killer statistics are that prove it. I’m calling Stacy-Marie Ishmael over at FT Alphaville this month’s winner with BarCap vs HUD on HAMP.
Evidence shows that there are principal increases for 80% of the people who go through HAMP. That is the exact opposite of what you’d like to see! It lowers interest rates, but it also increases the length of the loan. And for those who don’t have principal reduction, there is a massively high redefault rate. People lose their homes anyway, even after jumping through cumbersome hoops.
Predatory lending is hard to define, but a product is predatory that sinks people deeper into debt without the expectation that they can pay it off. And that is exactly how HAMP functions. For millions of people HAMP is their main interaction with the government and embodies what the government is capable of, and this creates disillusionment and discredits the liberal state in a profound way.
And Warren Demands Accountability
The Congressional Oversight Panel, lead by Warren, has been in the lead at making information public and bringing the complaints of the people straight to those in power. (It falls under her jurisdiction because HAMP uses TARP money.) When you see the fights on youtube between Warren and Geithner, the biggest ones, the ones that make Geithner cringe the most, it is about how HAMP isn’t working. Click through on that link to watch a video that gets straight to this. She demands accountability from the government and from the banking sector on the single most important issues facing Americans right now.
This is important. There’s pressure to be quiet, to hope that a quick housing and economic recovery will just make this whole foreclosure crisis go away. But Warren has demanded answers. COP released a report in early 2009 about the problems with HAMP, data collection and foreclosure, a report that still stands up. She’s done that at every step of TARP, but it matters here specifically for consumer protection.
And this is exactly how the CFPA should work. They fight to get good information disclosed to the public about how the banks and the Treasury department are failing the American people, reporters and wonks explain the information to the public, Treasury is held accountable. Treasury is currently working overtime to make HAMP work better; every month they are putting pressure where they can to make it better. That’s how a healthy government is supposed to work, but it can only be done if the tone is set by an outsider. And Elizabeth Warren is the one qualified candidate with a proven track record of standing up to the banks and to the Treasury.
And as Steve Clemons wrote: “It’s about time that at minimum, the White House got a ‘team of rivals’ on economic policy rather than just a ‘Team of Rubins.’”
Mike Konczal is a Fellow at the Roosevelt Institute.
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iPhone 4 hitting 17 more countries on Friday | Apple - CNET <b>News</b>
The newest flavor of Apple's smartphone will arrive in additional markets July 30, including Canada, Denmark, Ireland, Italy, and Singapore--but not South Korea. Read this blog post by Lance Whitney on Apple.
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Note: the video is not showing on iPad.
Any chance of an alternative format (I assume the one on the page is in Flash)?
Thx.
Posted by readerOfTeaLeaves | July 9th, 2010 at 11:03 pm
Parents, Education, & Symptoms
Parents have got to get in the game, if they want to continue participating. The education system is an abject failure. It has to be replaced, and the tool is there to do it. Parents do not require permission from government or multinational corporations. Uncontrolled multinational growth is a function of community failure.
Of course the multinationals want nations, states, communities and individuals competing against each other; their controlling interests naturally breed on control. Of course they pay the economists to argue that competition is the be all and end all. On the one hand parents are competing in a system designed to ensure they lose, and on the other they attempt to give their own children a comparative advantage over other kids, locking failure in for the community.
The best thing parents can do is build strong, independent communities, so all kids can be successful. In net, parents are isolating their children into a competition with the multinationals, while their own governments are offering them a near-term profit to dissolve their families, paid for by the multinationals, which the governments are competing for, by giving them your money, your property, your taxes, and your ideas. And what makes it all work is parents competing to get in their cars and go shopping to feed the multinationals.
Economies are self-correcting. Multinationals cannot change their behavior. They destroy their own food chain, new families, by economic design. The multinationals are writing the laws, to which parents are subjected, and to which the multinationals are exempted, in a political system paid for by the parents. If the community is simply an extension of the State, the system may only liquidate. A constitution is designed to protect the State from itself. Only a community can protect liberty, and liberty is the path to the future.
Much of America is a victim of its own success. The multinationals have grown alongside strong communities. GDP measures consumption cost. It in no way measures investment or profit. The multinationals are simply a looking glass, and what parents see is what they want to see. Politicians tell parents whatever they want to hear, largely that the problem is government or corporate.
Yes. The more you shop, the longer it will take for the machine to target you, but the machine has caught up to everyone now. An American flag does not make a multinational American. Because some communities choose to be fat, dumb, and lazy in no way limits other communities. Liberty is not subject to majority vote. If a majority jumps off a bridge, will you?
Anything is fixable, if the right people are in charge. In this case, the parents have to take charge of the economy. There is always a reservoir of goodwill for children somewhere. When you have ruled everything else out, what remains, no matter how improbable, is the solution. Not so ironically, Barack Obama was a community organizer.
So long as those cleats hold onto the bank, and you have a good strong rope of small businesses, we’ll pick that $500T load.
Right now, your problem is RICO organization of multinationals through every level of government to preempt participation by small family businesses, to backfill the economy.
Posted by kevinearick | July 10th, 2010 at 4:26 pm
@readerOfTeaLeaves Unfortunately the video we embedded is from GRIT’s site, and they put it up in flash, so there’s not much we can do. Sorry I can’t be of more help!
Posted by Bryce | July 12th, 2010 at 10:57 am
Thanks Bryce. I came back and viewed it on a ‘not-an-iPad’, but appreciate your explanation.
Posted by readerOfTeaLeaves | July 12th, 2010 at 5:41 pm