A Fighting Chance

“foam the runway” for them: For more discussion of this meeting, including a discussion of Secretary Geithner’s “foam the runway” comment, see Neil Barofsky, Bailout, 150–58.

long-term economic growth: For example, COP noted: “The Panel remains concerned regarding the long-term sustainability of HAMP modifications. High, persistent unemployment continues to present problems for many borrowers. HAMP modifications leave borrowers with continuing high levels of negative equity, and even after receiving a modification, half of HAMP borrowers are still paying 63 percent of pre-tax income towards debt.” COP report, December 2010, 385. “The Panel first expressed concerns that HAMP was not designed to address the root causes of the housing crisis in March 2009. In subsequent reports the Panel has raised serious concerns about Treasury’s efforts to address these problems, noting that HAMP has failed to address foreclosures caused by factors such as unemployment and negative equity.” COP report, December 2010, 236–37; “The finding that [Home Owners’ Loan Corporation] loans were more likely to end in foreclosure if the borrower had little or no equity has important implications for HAMP. It suggests that borrowers with less equity or negative equity will be more likely to redefault on their modified loans, and thereby underscores the importance of principal reductions to the program’s long-term success.” COP report, December 2010, 348. “Homeowners with unaffordable mortgages were not the only group hurt by the financial crisis. Millions of homeowners who didn’t have mortgages or who had affordable mortgages saw the value of their home plummet, and this was devastating for those who were going to use the equity in their home to finance their retirement.… For all of these people, relief will only come once the economy starts growing again. That growth will only occur once the housing market has stabilized, and that stability will not develop until people move out of homes with mortgages they cannot afford and into housing they can afford. So to the extent that HAMP simply kicks the foreclosure can down the road, it ends up hurting all of the people who are desperate for the economy to start growing again so that their lives can return to normal.” COP report, December 2010, 450; “Since any intermediate to long-term resolution of the housing crisis must reside substantially with the private sector lenders and investors who hold the mortgage notes and liens, instead of spending an additional $30 billion on a government-sponsored foreclosure mitigation effort, we believe Treasury would be best served by strongly encouraging these participants to engage in good faith, market-based negotiations with their distressed borrowers. In our opinion, this is the best way to bring stability to the housing market so that the economy can start growing again.” COP report, December 2010, 451.

FDIC chair Sheila Bair raised the issue repeatedly: For example, Sheila Blair proposed making FDIC bailout funds for Citibank conditional on forcing Citi to participate in a foreclosure prevention program. Charles Duhigg, “Fighting Foreclosures, F.D.I.C. Chief Draws Fire,” New York Times, December 10, 2008.

wrote op-eds and gave speeches: For example, Les Christie, “FDIC Chief: Intervene on Foreclosures,” CNNMoney, December 2, 2008. See also Gretchen Morgenson, “Why Treasury Needs a Plan B for Mortgages,” New York Times, December 5, 2009.

See also Art Levine, “As Treasury Department Stumbles, Liberals Push Tougher Measures to Stem Foreclosures,” Truthout, November 30, 2009.

to greater depths: Over time, the Republicans named six different men to the Congressional Oversight Panel: Congressman Jeb Hensarling and Senator Judd Gregg, followed by former senator John Sununu, former SEC commissioner Paul Atkins, Mark McWatters, and Dr. Ken Troske. Later, when I resigned to take over the job of setting up the new consumer agency in September 2010, Senator Ted Kaufman took over and added his energy to the subsequent COP investigations and reports. Senator Kaufman was a longtime advisor to Joe Biden, and he had been appointed to take over Biden’s Senate seat when Biden was elected vice president. He testified on behalf of the panel, and he oversaw the final report, wrapping up COP’s work.