SIGTARP Reports and Truth Vigilante Slaps Administration
The Special Inspector General for TARP continues its lonely efforts to encourage the Treasury Department and its lame-duck leader Timothy Geithner to do something besides kiss bankster ass. The best news is that SIGTARP has its own investigators, who actually did their jobs. SIGTARP has indicted 61 people, resulting in 31 convictions so far. They aren’t just going after the little scams, either; they have nailed a bunch of bank officers, admittedly at small banks, and a real cheat at mortgage originator Taylor, Bean and Whitaker.
The headline news for Shahien Nasiripour, writing for the Financial Times, was the failure of Treasury on the home mortgage modification program, HAMP. SIGTARP blames Geithner for not penalizing servicing companies, most of which are owned by giant banks, for their shoddy work on loan modifications, in spite of repeated recommendations that he do so. The President blamed banksters for giving homeowners the runaround, apparently unaware that Treasury has rules about that stuff that it isn’t enforcing.
Nasiripour then points out that the report highlights the failure of the administration to help homeowners. The Treasury produced a spokesperson who told the FT that “the agency’s programmes have been among the most effective in helping borrowers avoid foreclosure.” Nasiripour, a well-known truth vigilante, shows how it’s done. In the next paragraph he writes: “To date, the administration has spent just $3bn of the $45.6bn authorized by the Tarp bail-out to restructure distressed borrowers’ mortgages, Sigtarp said.” New York Times Public Editor Arthur Brisbane should learn from Nasiripour.
And here’s some context for the failure of the bankster lovers at the Treasury on the issue of penalizing mortgage servicers who aren’t complying with the requirements related to modifications.
For three straight quarters, despite finding that the majority of its Top 10 servicers need substantial or moderate improvement, Treasury has only temporarily withheld incentives. For the first time, Treasury announced in December 2011 that it would permanently withhold incentives from JPMorgan Chase & Co. if it continues to perform poorly. JPMorgan Chase’s continued refusal to comply with program requirements is extremely troubling.
p. 10. It’s true that the amount of money involved is peanuts to JPMorgan Chase. Through the third quarter of 2011, Treasury withheld $67.3 million in incentives, pending improvement in servicer performance. Treasury is now making noises about making that permanent. Wow, that’s gonna hurt revenues at JPMorgan by .07%. Treasury hasn’t taken similar action against Bank of America, which showed a bit of improvement in the last assessment, and SIGTARP isn’t pleased. Maybe Bank of America needs the money more than JPMorgan. It may be that both are benefiting more than that from the refusal of their servicing arms to modify mortgages. SIGTARP might want to take a look.
SIGTARP doesn’t explain why the other top servicers which need “moderate improvement” aren’t being penalized, despite failing to comply with program rules. Wells Fargo, for example, has received $120 million, but only requests for improvement from Treasury
It does seem like TARP should be over, doesn’t it? After all, the big banks have all exited the main program of capital investments. It turns out that there are 371 community banks which haven’t been able to exit, and show little ability to do so in the foreseeable future. Treasury holds special preferred stocks issued by these banks, which are currently paying a 5% dividend to the Treasury, rising to 9% in 2013. SIGTARP suggests that may not be a good thing for those banks, and recommends that Treasury take steps to provide a clear exit path, either for the banks, or for the TARP program. Treasury has hired a consultant to help with this, at a flat fee of $4.5 million. It’s apparently too hard for Treasury to manage an exit program on its own. P. 147.
One more bit of context. Treasury hates SIGTARP. When he retired last February, Neil Barofsky, the original holder of the position, drew this comment from an anonymous coward at Treasury: it’s “a nice valentine to us”. Every report he issued was attacked by anonymous cowards at Treasury. Currently we have an acting head of SIGTARP, Christy Romero, because the Senate operates only with the consent of the minority Republicans. Romero came to SIGTARP from the SEC’s useless Division of Enforcement, where she worked on financial fraud issues. She then served as counsel to Christopher Cox, the incompetent Chair under under W. Bush, and then for Mary Schapiro, the current Chair of the SEC.
Let’s hope that her initial training in going through the motions of enforcement was improved by her work with Barofsky.