TOPIC: Dept. of the Treasury

Name that loan modification program: government must do more to market mortgage aid

Four years after the housing bubble burst, all levels of government are getting their bearings in addressing the foreclosure crisis. A mix of programs are either being started or revived that might actually address specific payment problems homeowners face.

Illinois announced on Friday that it will use $100 million in federal money to start a Mortgage Resolution Fund, where a public-private partnership will buy “underwater mortgages” — those where delinquent payments are worth more than the mortgage itself — from homeowners in the Chicago area. (more…)

As CFPB starts up, remember that consumers are citizens too

Ever heard of Bank Investment Consultant?  Me neither — but their writer Dave Lindorff has the best summary of what the Consumer Financial Protection Bureau is supposed to be doing when it opens next week.

We now have the unique opportunity, not afforded since the creation of the Consumer Products Safety Commission in 1972, to watch how a regulatory agency designed to protect individual citizens from corporate overreach will actually work.

A regulator scorned? Why Sheila Bair’s gender matters

Sheila Bair

“[W]e were being ignored, and we had something to bring to the table,” Joe Nocera quotes the former head of the FDIC in the New York Times Magazine.  Bair was one of the few people at the top levels of government to push for more restrictions on investment banks and one of the very few to say that more banks should be allowed to fail.  It wasn’t just that the FDIC was a smaller agency than most, or that Bair was a Republican.  The reason Sheila Bair got no traction for her sensible views was often due, by all appearances, to the fact that she’s a woman. (more…)

Above, beyond, outside the law: the result of a “gentler approach” at the SEC

We want to believe that no one is above the law.  That’s why the Gretchen Morgenson and Louise Story in the New York Times about the SEC handing off investigations of misdeeds at banks across the U.S. to banks — and to lawyers the banks hire — is so upsetting.  The basic idea is that the SEC doesn’t have enough staff to investigate all the potential criminal behavior out there, so they call on the banks to do it themselves, usually by hiring law firms who then research the alleged crime and suggest a course of action to the SEC.  (more…)

The bailout that worked

Kate Linebaugh of the Wall Street Journal puts together a lot of evidence that the Michigan auto industry is revived. Auto makers have announced more plant expansions and new jobs in Michigan; GM, Chrysler and Ford are at 37 percent production capacity, compared with 30 percent a decade earlier. “In Sterling Heights, Mich.,” Linebaugh writes, “a Chrysler plant saved from closure last year is now churning out two midsize models with 2,300 workers.”

Incredibly, Linebaugh goes the entire piece without mentioning the $80 billion U.S. Treasury Dept. bailout that enabled this revival! The Journal did report three weeks earlier that taxpayers will ultimately be responsible for $14 billion of this $80 billion. But in return, the Obama administration claims that hundreds of thousands of jobs have been created.

Convictions on Wall Street: Did Hell just freeze over?

No one has been arrested for crimes related to the subprime mortgage crisis and the implosion of the U.S. economy.  Let’s face it — we don’t have enough of the comfortable kinds of jails to hold the thousands of denizens of Wall Street who were responsible for it (lightbulb! job creation through the construction of minimum security prisons!).

But as Chad Bray reports in the Wall Street Journal,the federal government is having some success prosecuting inside traders, with Messrs. Zvi Goffer, Emanuel Goffer, and Michael Kimelman the latest to be convicted of using non-public information to soak the investing public.  An appeal is expected, but if the conviction stands, these three individuals who sought to get rich quick could have 20 years in federal prison to think about where they went wrong.  And the SEC and the Justice Department have another success in fighting the latest species of organized crime.

Too male to fail: Budget negotiations missing fifty percent of the population

Where are the women?

Nowhere to be seen in discussions on the nation’s financial future, reports Kate Ackley of Roll Call in an article about the lack of women on the White House-Congress budget negotiation panel.  15 women’s organizations have asked the White House to include women in negotiations on the national budget between the White House and Congress. (more…)

SEC outsourcing investigations shows key role of . . . the media?

David Hilzenrath of the Washington Post reports that the government often investigates large companies for corruption by . . . asking the companies to investigate themselves.  In response to government inquiries, companies like Siemens (targeted for bribery in overseas business) end up hiring large law firms to conduct investigations of the practices the government is concerned about.  In Siemens’ case, the in-house investigation ended in an $800-million U.S. fine to the German company.  In other cases, however, Hilzenrath’s reporting makes it clear that private investigators leave lots of stones unturned. (more…)

SEC and CFTC enforcement divisions: public service upgrade required

Does more money need to go to government agencies investigating fraud and malfeasance on Wall Street?  That’s the question Ben Protess looks at in the New York Times.  The Commodity Futures Trading Commission and the Securities and Exchange Commission are the bodies that were supposed to have stopped subprime machinations leading up to the recession, but didn’t.  Without staff or even computers that could help them keep up with the bad guys on Wall Street, both the SEC and the CFTC got new funding in early Obama administration budgets.  Now they’re facing the budget knife just like everyone else, and the claim is that they won’t be able to do their jobs.  My sense is that these people are thinking about their agency’s budget when they should be thinking of the country’s. (more…)

Wells Fargo and foreclosures: There really is no place like home

Underwater homeowners facing foreclosure despite promises of federal aid disrupted a  meeting of Wells Fargo Bank shareholders in San Francisco yesterday, reports Aaron Glantz of The Bay Citizen.

Demonstrators called on the firm, a recipient of emergency taxpayer aid during the financial crisis, to institute a foreclosure moratorium. Eight were eventually arrested after refusing to leave the building. (more…)