If Goldman Sachs ends up paying a billion dollars as punishment for misleading investors in the Abacus deal, what should Washington pay for misleading the American people?
Given the utter failure of the Obama administration’s $75 billion mortgage modification program (a.k.a. the HAMP), it’s worth a thought.
After all, here was a plan that lots of folks at the White House and the Treasury must have known wouldn’t work as advertised. But they went ahead anyhow – and now that it’s not working, who ends up paying?
You know the answer to that one.
Now, I’ve got no hard proof that anyone at the White House ‘knew’ the mortgage modification plan would fail.
But consider this – on its launch date, February 18, 2009, it was pretty obvious to me – and my brain functions at a significantly lower speed than either Larry Summers’ or Tim Geithner’s. Please read my column ‘Why Obama’s Homeowner Rescue is Bound to Fail’ from that day.
No doubt, defining a program’s success or failure can be a fuzzy affair. So let’s look at some hard numbers taken from the government’s April HAMP report.
To start, the HAMP is nothing more than a giant taxpayer-funded foreclosure prevention scheme. It works by doling out government subsidies (up to $10,000 a mortgage) to both lenders and borrowers to ‘modify’ or reduce a mortgage.
Today, the U.S. has more than 6 million homeowners at risk of foreclosure. And with the HAMP, the White House pledged it could keep 3 to 4 million of them – the ‘responsible homeowners’ – in their homes.
What’s a responsible homeowner, you ask? It’s just a PR phrase invented by the White House to stick single-family mortgage deadbeats into the HAMP and leave out the speculators.
But here we are, well over a year into the HAMP and there are only 295,000 responsible homeowners with ‘permanent’ modifications. It’s less than 10% of the much-hyped 3 to 4 million figure.
And that shortfall matters. After all, scale is everything with the HAMP. It makes little difference if you save one house in the neighborhood from foreclosure. But save a dozen and you’ve saved the neighborhood.
With the HAMP, you can forget about the neighborhood. Keep that 3 to 4 million figure in mind and consider that so far there have been only 1.2 million borrowers who have even signed up for a ‘trial’ or test modification.
And the number of those signing up is barely growing, just 37,000 last month. In the final reckoning, HAMP will be lucky to get 1.5 million trials and 500,000 permanent modifications.
And we’ll be even luckier if a good chunk of those 500,000 don’t actually re-default. The ‘permanents’ are currently paying 64.3% of all their income in various mortgage, credit card, car-lease and alimony payments. They’re shaky credits at best.
So HAMP’s a failure. But it’s worse than that – it’s a predictable failure. There were never 3 to 4 million ‘responsible homeowners’ facing foreclosure. How can someone be ‘responsible’ while putting down less than 5% on his house or taking out a ‘no doc liar loan’?
It’s hard to figure how all the White House PhDs missed this and got their numbers so wrong. Unless of course, they didn’t miss it – but simply judged the HAMP to be politically expedient policy. Not that anyone in Washington ever fesses up to doing that kind of thing.
In the meantime, the Treasury and HUD still rate HAMP a great success. ‘As the number of homeowners receiving permanent modifications continues to increase, the Administration’s comprehensive efforts are making an impact in the housing market’s overall recovery,’ said David Stevens, FHA Commissioner and HUD Assistant Secretary for Housing, in Monday’s press release.
That’s Washington-speak for ‘we’re praying housing prices don’t collapse again.’
It will be amusing to see how President Obama defends the HAMP come the November mid-term elections.
Here are the arguments we can expect: ‘We had to slow the collapse of house prices.’ ‘We had to do anything we could to stop foreclosures.’ ‘We’ve ended up helping hundreds of thousands of responsible American homeowners.’
But forgive me for sharing my own private daydream. I see a Senate Investigations Subcommittee hearing. I see Larry Summers giving testimony. And I see Carl Levin screaming at him – ‘So this is your email, Mr. Summers…What did you mean HAMP is a sh**ty program?’
如果高盛集团(Goldman Sachs) 最终以支付10亿美元罚金作为在Abacus交易中误导投资者的惩罚，那美国政府应为误导美国人民付出何种代价？
但想想这个吧，在该方案发布之日，也就是2009年2月18日，这一点对我而言即显而易见。而我的大脑运转速度远低于白宫首席经济顾问萨默斯(Larry Summers)或者财政部长盖特纳(Timothy Geithner)。请读一读那天之后我的专栏文章《为何奥巴马的房主拯救方案注定要失败》？(Why Obama’s Homeowner Rescue is Bound to Fail)。
所以说HAMP方案失败了。但更糟的是，这个失败是可以预知的。从未有300至400万“负责任的屋主”面临止赎。房贷首付低于5%或者做了无文件谎言贷款(no doc liar loan)者怎么会是“负责任”的人呢？
同时，美国财政部及美国住房和城市建设部（HUD）仍将HAMP视为一个大成功。在周一发布的新闻稿中，联邦住房管理局(FHA Commissioner)局长及住房和城市建设部助理房屋局局长史蒂文斯(David Stevens)说，接受永久房贷修正补助者持续增加，政府的综合措施正在对房市的全面恢复产生影响。