Category Archives: Federal government

Losing an opportunity

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The economy collapsed in 2008.

Since then, the financial industry got billions, the auto industry was rescued, and the rest of us got the bills and not much else.

The financial industry is now strong enough to run the country for the rich. The auto industry is no longer on its last wheels.

But even the most obvious and urgently needed reforms remain undone.

Take the mortgage industry. Please.

Remember all the mortgage documentation problems that were revealed after the flood of foreclosures started drowning homeowners? Turns out the a lot of banks had screwed-up documentation for the properties they were taking “back.” Their work was so bad and fraudulent that sometimes they wrongly kicked people out of their houses. (Matt Taibbi had a great piece on this in Rolling Stone.)  The mess screamed for a regulatory fix.

But it didn’t happen.

The Government Accountability Office provided testimony before the Senate Subcommittee on Housing, Transportation and Community Development last month that just goes to show that it takes a whole government to ensure that nothing gets done. 

In the beginning, before the crash, regulators ignored the problems that were going to push the economy to the edge of the cliff. From the GAO testimony:

Until the problems with foreclosure documentation came to light, federal regulatory oversight of mortgage servicers had been limited, because regulators regarded servicers’ activities as low risk for banking safety and soundness.
That means it wasn’t sexy enough.
 
When it became clear that something was seriously wrong with the mortgage industry, regulators finally rushed in to…examine files! Again, the GAO:

These examinations revealed severe deficiencies in the preparation of foreclosure documentation and with the oversight of internal foreclosure processes
and the activities of external third-party vendors.
 
And then? Silence, mostly. Some enforcement actions were issued after the file review, but that’s about it.

 Regulators plan to assess compliance but have not fully developed plans for the extent of future oversight…they had not determined what changes would be made to guidance or to the extent and frequency of examinations. Moreover, regulators with whom we spoke expressed uncertainty about how their organizations would interact and share responsibility with the newly created CFPB (Consumer Financial Protection Bureau) regarding oversight of mortgage servicing activities.

 CFPB staff members say that mortgage oversight will be a priority, but “as of April 2011, CFPB’s oversight plans had not been finalized.”

Some academics and industry insiders want national servicing standards established to that would require mortgage servicers to 1) sign statements that their mortgages met legal requirements and 2) commit them to try to modify loans before foreclosing, according to the GAO. But, guess what?

“The content of such standards and how they would be implemented is yet to be determined.”

The Conumer Financial Protection Bureau has until 2013 to issue mortgage servicing rules. That’s a long time to wait for something that should already be done.

Maybe next time we should do things in reverse. Don’t reward the crooked banks and financial firms who drove the country to the edge.

Work, instead, on fixing that damned cliff itself.

 
 
 
 
 

 

Walker: heading into the transportation funding abyss?

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Is Gov. Walker’s road-building binge going to keep Wisconsin mired in the budgetary blues?

His proposals to charge ahead with freeway creation and expansion all over the state never did make much economic sense — hey, gov, the economy will not be helped if trucks can get between cities on new freeways, but break their axles on ruined local roads — but they seem less and less reasonable when the federal highway trust fund is considered. Congress just can’t get a deal done on funding, which means that state taxpayers may end up funding more of the road binge than Walker and his gang are letting on.

From the Wall Street Journal:

WASHINGTON—A six-year $556 billion highway and transit construction program proposed by President Barack Obama is the latest casualty of Washington’s spending stalemate.

Sen. Barbara Boxer (D., Calif.), who is leading talks on the issue, said Wednesday she is now considering a two-year measure that would freeze federal spending on road, bridge and transit projects at existing levels.

The White House had called for a six-year infrastructure bill in his fiscal 2012 budget in part as a measure to create jobs and boost the economy. But lawmakers haven’t agreed on how to pay for the bill, amid a broader debate over how to slash federal spending.

Ms. Boxer, the chairwoman of the Senate Environment and Public Works Committee, said “funding challenges” could require a two-year, $109 billion bill setting funding at existing levels plus inflation. The bulk, if not all, of the funding for such a bill would come from the federal gasoline tax. Lawmakers would still need to plug a $12 billion shortfall under that bill, because gas-tax revenue is falling.

A crowd in Wauwatosa for Vukmir and Sensenbrenner

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There was a big pro-worker crowd at the Wauwatosa Library at  last night’s town hall meeting with State Sen. Leah Vukmir (R-Wauwatosa) and Republican US Rep. F. James Sensenbrenner, apologists for Gov. Scott Walker.

The meeting at the Wauwatosa Public Library ended early. This photo is by Steve Brachman.

Meanwhile, in Washington…

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It’s easy to be totally focused on Gov. Scott Walker’s efforts to destroy unions along with most of what is good about Wisconsin.

But, hey, they’re trying to screw you in Washington, too.

The House and Senate this week agreed to a continuing resolution that will keep the government chugging along for a whopping two weeks. The fight ain’t over yet, though.

The House, keen to cut programs that benefit anyone making less than a zillion dollars a year, is pushing for a $61 billion cut in discretionary funding, according to The Economist.

According to The Center on Budget and Policy Priorities:

Some 157,000 at-risk children up to age 5 could lose education, health, nutrition, and other services under Head Start, while funds for Pell Grants that help students go to college would fall by nearly 25 percent, under a bill passed by the House that would cut current-year non-security discretionary funding by an average of 14.3 percent.  The bill (H.R.1), which would fund the government for the rest of fiscal year 2011, now must be considered by the Senate. 

H.R. 1 also would kill a program that helps low-income families weatherize their homes and permanently reduce their home energy bills, cut federal funds for employment and training services for jobless workers and for clean water and safe drinking water by more than half, and raise the risk that the WIC nutrition program may not be able to serve all eligible low-income women, infants, and children under age 5.  In addition, it would cut funds for the Centers for Disease Control and Prevention by 10 percent, for the Food and Drug Administration by 10 percent, and for the Food Safety and Inspection Service by 9 percent.

Wisconsin, according to CBPP, would stand to lose $30 million in education funding — in this fiscal year!

According to CBPP:

At the same time, H.R. 1 would increase overall funding for security programs (those funded by the Defense, Homeland Security, and Military Construction-Veterans Affairs appropriation bills) by a little less than 1 percent.

Also, the 14.3 percent figure is a bit deceiving.  To achieve that level of overall cuts for non-security programs for the entirety of 2011, funding for those programs will have to fall on average by nearly one-fourth over the seven remaining months of the fiscal year.  This could make it even harder for some agencies to maintain important activities than the 14.3 percent figure for all of 2011 suggests.

The House, by the way, would not fully share the sacrifice it would impose on others, as its own budget would decline by a mere 6%.

There is not many surprised on who voted how on this bill:

Yea    WI-1    Ryan, Paul [R]
Nay    WI-2    Baldwin, Tammy [D]
Nay    WI-3    Kind, Ronald [D]
Nay    WI-4    Moore, Gwen [D]
Yea    WI-5    Sensenbrenner, F. [R]
Yea    WI-6    Petri, Thomas [R]
Yea    WI-7    Duffy, Sean [R]
Yea    WI-8    Ribble, Reid [R]

There you have it. Something besides Scott Walker to think about.