The U.S. Treasury is a bad baby daddy
It occurs to me, when reading Treasury’s latest excuse for the unbelievably shitty performance of HAMP, that Treasury has been a really crappy baby daddy. From a recent New York Times article (also see this):
Mr. Summers declined to comment on the record, but other current and former officials echoed Mr. Geithner’s view that the administration had done well under the circumstances. Some said they underestimated the complexity of helping millions of people. Some said they tried too hard at first to protect taxpayers from unnecessary losses. But they agreed that the most important problem was beyond their control: the mortgage industry was set up either to collect payments or to foreclose, and it was not ready to help people.
“They were bad at their jobs to start with, and they had just gone through this process where they fired lots of people,” said Michael S. Barr, a former assistant Treasury secretary who served as Mr. Geithner’s chief housing aide in 2009 and 2010. “The only surprise was that they were even more screwed up than the high level of screwiness that we expected.”
I mean, let’s say I have a whining teenager who I’ve just realized has stolen my money, signed my name to various notes to the principal, and has been playing hooky for months or even years. I might not ask that same kid to help his friends with their college applications unsupervised.
I might think he needs to be watched, and that I’d keep in mind the selfishness and immaturity that he’s already exposed as I watch him, to make sure he doesn’t end up plagiarizing his best friends’ college essay, or steal the application fees, or something else I hadn’t even thought of.
What I wouldn’t worry about is the possibility that he’s not smart enough to help his friends – he’s already shown me how manipulative and clever he can be when it benefits him.
Moreover, if I didn’t supervise that kid, then after none of his friends get into college I’d blame myself, and not the kid, for my failing. Because he’s only a kid, and I’m supposed to be the grownup. I’d be a bad baby daddy.
That’s what Treasury is doing. Those guys knew better than to trust the banks with something like HAMP, which was essentially unsupervised and had too many conflicting incentives for the banks to ever be expected to actually help people in trouble with their mortgage. They set it up terribly, looked the other way when the banks did nothing (and as Barofsky explained to us, this was intentional – they were foaming the runway for the banks to recover), and now they’re trying to say it’s because the banks were screwed up.
Not good enough, Treasury.