I believe this is former Special Inspector General of TARP Neil Barofsky’s 206th media appearance in support of Bailout. He has tirelessly criss-crossed the media landscape to tell the story of his time in Washington and offer a warning about a government captured by Wall Street. So instead of yet another review, let me tell a personal story that I think will yield some insight on the human toll of that government capture.
This is the first, and possibly the only, book about Washington where I can do the “Washington read,” aka flipping to the index and look for my name to find out what was said about me. Indeed, right below Andrew Cuomo, there I am, “Dayen, David 154-6.”
Let me tell you how that came about. Neil contacted me and asked if he could use an example from my Portrait of HAMP Failure series to illustrate the real-world consequences of the program, which all too often turned the loan modification process into a nightmare for homeowners. I gave him a number of suggestions, and he selected the story of Jeremy Fletcher, a Southern California swimming pool installer who bought a new home at the height of the bubble, right before the housing market crashed – and the market for installing pools along with it. Fletcher’s HAMP odyssey included a yearlong fight with Citi Mortgage, and just when he maneuvered to the point of getting a permanent modification, his loan was sold off to Saxon Mortgage, who then refused to honor any of his previous agreements. “It seemed like we had cornered Citi, got them to the point where they had to modify, and they just up and sold the loan,” Fletcher told me at the time.
Neil found this to be the perfect story for the book, and he agreed to use it. A few months before publication, he called me and asked me for contact information for Fletcher, to check for any developments in the story. I not only provided Neil with his email address and phone number, I tried to contact him myself. I had talked with Fletcher in the past with updates on his status (basically, he was in the same fight with Saxon Mortgage), and was curious about the current state of affairs.
And the truth is that Jeremy Fletcher could not be found. His email address was tied to his pool business, and it’s unclear whether that remains in operation. The phone number just went to voicemail. I never got back in touch with Jeremy Fletcher.
This is depressingly normal with regard to these HAMP horror stories. People have to leave their homes. They move in with family or friends, or into their cars. Their businesses end, and in some cases their marriages end. Far too many of the stories, which is to say more than zero of them, end in suicide.
This is the aftermath that results from a set of policies concerned more with banks than homeowners. The incoming Obama Administration made a series of promises around helping mitigate the worst aspects of the foreclosure crisis, and they failed on a host of levels. But it’s not enough to just say “they failed.” You have to say “Jeremy Fletcher has vanished.” When Barofsky cites Timothy Geithner famously saying that HAMP was designed to foam the runway for the banks, allowing them to spread out foreclosures and absorb the losses in a more manageable fashion, the runway was foamed with people like Jeremy Fletcher. They had their last remaining savings squeezed out of them, with hopes of permanent modifications that would allow them to afford their mortgage payments, and then the banks pulled out the rug, taking over the homes at a time convenient for them. It was textbook predatory lending, and the opposite of what the Obama team promised as one of the clear benchmarks for whether or not TARP succeeded.
Housing policy has become the great unmentionable in this Presidential election. Mitt Romney released his housing plan in a Friday night news dump on the same day he released his tax returns, which should show you the importance he places on it (as if you didn’t get it from the page and a half of vague “solutions” in the policy document). You can barely even find Obama’s housing plan on his website. The candidates visit swing states ravaged by the foreclosure crisis, places like Florida and Nevada and Ohio, and they promise people better lives and a brighter future. But they don’t dare discuss housing.
The best way to understand why is to read Bailout. In “A Connecticut Yankee in King Arthur’s Court” style (more like “A New York Prosecutor in the Potomac Swamp”), Barofsky introduces us to how Washington works, right from the first page, where Treasury official Herb Allison basically tells him to take a dive on his SIGTARP reports as a way to get ahead in DC, offering “the gold or the lead, the bullet or the bribe,” in the way Colombian drug lords intimidate those potentially harmful to their business. He explains how Wall Street thinking has infected Washington, how the change of parties is more of a formality, and how, as he writes, “the American people should lose faith in their government.” His actions as SIGTARP saved American taxpayers billions of dollars and actually put a few of the bad guys in jail, a rare feat for the financial regulatory apparatus. But ultimately, Barofsky’s story is about people like Jeremy Fletcher. And based on this book, I’d say Barofsky was the only guy in Washington who cared about Fletcher’s story.
Please welcome Neil Barofsky to the Lake.
[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]