Krugman:
[D]ebt relief for homeowners — which could have done a lot to promote overall economic recovery — has simply dropped off the agenda. The existing program for mortgage relief has been a bust, spending only a tiny fraction of the funds allocated, but there seems to be no interest in revamping and restarting the effort.
NYTimes article yesterday:
As the nation’s housing market continues to teeter, the Treasury Department on Thursday penalized three of the nation’s largest banks for subpar performance in administrating a government-sponsored program to modify mortgage loans for distressed homeowners. [. . .] Neil M. Barofsky, who resigned in March as special inspector general for the bank bailout, described the assessments and penalties as a “lost opportunity” to hold lenders more accountable.
“It further reaffirms Treasury’s long-running toothless response to the servicers’ disregard of their contract with Treasury, and by extension, the American taxpayer,” Mr. Barofsky said in an e-mail.
[. . .] The administration predicted that three million to four million Americans would benefit, but so far, only 699,053 permanent modifications have been started. To date, Treasury has spent about $1.34 billion on HAMP.
(Emphasis supplied.) The good news is $49.7 billion is still available for an actual plan for the homeowner crisis. Now all we need is Obama to fire Geithner . . .