Obama administration refuses to spend billions allocated to help mortgage modification programs says TARP Inspector General

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TARP Inspector General cites utter lack of oversight by Obama, taxpayer losses include $300 million in the failure of UCB.

11/20/11, "Report: Taxpayers’ Entire TARP ‘Investment’ Lost in Bailout of United Commercial Bank," Big Government, Laura Rambeau Lee

"The Quarterly Report issued in October 2011 by the Special Inspector General of the Troubled Asset Relief Program (TARP) reveals the utter lack of oversight and mismanagement of funds in excess of $700 Billion Dollars. The 316 page report begins:

Through the Troubled Asset Relief Program (“TARP”), the American taxpayers became investors in hundreds of financial institutions, the auto industry, and cer­tain markets for asset-backed securities, and the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) serves on the front line to protect those investments. SIGTARP is the only agency solely charged with a mission of transparency, oversight, and enforcement related to the taxpay­ers’ unprecedented investment of hundreds of billions of dollars in the private sector…. This month…the first criminal charges were filed against senior executives of a TARP bank when two senior executives of United Commercial Bank (“UCB”) were charged in connection with an alleged scheme to defraud investors. The Department of Treasury (“Treasury”), and by extension the American taxpayer, became investors in UCB’s holding company when it received more than $298 million in TARP funds. UCB was the first TARP bank to fail and the taxpayers’ entire TARP investment is lost.

TARP included $45.6 Billion to fund the Home Affordable Modification Program (HAMP) of which only $2.5 Billion (5.4%) has been spent. SIGTARP addressed its concerns about the poor performance of the HAMP program to the Treasury Department, but states that “Treasury has determined not to take any further action to implement SIGTARP’s recommendations. Treasury is giving up a chance at mean­ingful change and sadly, it is struggling

• homeowners who have the most to lose.”

The housing and mortgage crisis was a direct result of the increasing deregulation of the mortgage industry enabled by the Community Reinvestment Act of 1977 and the federal government’s ideological philosophy that everyone should and must be afforded their dream of home ownership, regardless of their credit worthiness or their ability to repay the mortgage. The federal government, through coercive threats of lawsuits for discriminatory lending practices, forced these lenders to make these risky loans."...

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The Obama administration has access to $45.6 billion allocated to help mortgage modification programs but refuses to spend more than $2.5 billion. I heard wacky financial broadcaster Clark Howard recently say banks were holding up the entire nation's recovery by being slow with mortgage modifications. Of course that isn't the case.

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