Former FDIC Chief: Some Obama Housing Policy Was “Stupid”

In writing about the new book recently released by former Federal Deposit Insurance Corp. chief Sheila Bair, a Wall Street Journal columnist notes some of Bair’s assertions about housing policy in the U.S. during her tenure at FDIC, including the notion that some of the Obama Administration’s housing policy was “stupid.” 

The WSJ column writes: 

Sheila Bair, the former chairman of the Federal Deposit Insurance Corp., came to Arizona for the launch of President Barack Obama’s signature housing plan in early 2009.

Advertisement

But Ms. Bair was never on board with the effort, she writes in her new book “Bull By The Horns.” She recounts that the expansive promises issued at the time made her nervous. As the president spoke, she writes, “I cringed as he threw out what I considered to be wildly inflated numbers” on how many people the loan-modification effort was being touted to reach at the time—up to 4 million homeowners.

Those concerns have been borne out. Currently only about 810,000 homeowners are enrolled in the main Treasury Department loan assistance program, known as the Home Affordable Modification Program. The president’s liberal supporters, who wanted more aid, have been disappointed.

The program put in place by the Obama team was far too complex, Ms. Bair argues. In addition, it required far too many documents from homeowners, as the administration wanted to emphasize its programs only were designed to assist “responsible” homeowners.

“To require every borrower to essentially prove that he or she could qualify for a new loan was stupid—the loan had already been made,” Ms. Bair writes. “Given the huge number of loans that needed to be reworked, as well as the problem of ill-trained, understaffed servicers, the cumbersome process was doomed to failure.”

Obama’s top advisers “were determined to keep me out of the design and operation of any of the programs from the very beginning,” Ms. Bair writes. The program, she writes, was “designed to look good in a press release, not to fix the housing market.”

 View the full column at WSJ.com

Written by Elizabeth Ecker

Join the Conversation (5)

see all

This is a professional community. Please use discretion when posting a comment.

  • Of course if the Obama policy said that you no longer had to qualify for the loan you could simply get a new one regardles off your situation, I am sure we would have more than Ms. Bair complaining about stupidity.

    Sheila Bair needs to be out on the stump promoting her book saying these types of things to grab peoples attention. When is the last time you ran out to buy a book by a former FDIC Chief.

  • A breath of fresh air.

    When it comes to housing our President and his “elite” team have absolutely no idea what they are doing but like the irresponsible leaders they are, they exaggerate to the uttermost.

    They may have provided hope but unfortunately they blew it up way out of proportion. When it comes to accountability, they seem to want to apply it to everyone but themselves.  

  • Ms. Blair’s comments are very naive. This program has turned out exactly the way it was designed which was to give Obama the credit and put the burden on the banks. .
    The proof is in the pudding since most major banks have been forced by the government (AG’s) through lawsuits and the global settlement to do far more proprietary modifications including principal forgiveness on not only primary residences but investment properties and second liens with reduced docs. You can now get principal forgiveness for hundred’s of thousands of dollars with just a pay stub.There are borrowers in litigation states who have not made a mortgage payment for 5 years where the bank is paying their taxes and insurance. They are hundreds of thousands of dollars in arrears and are now being given principal forgiveness with interest rates lowered to 2% and forgiveness of second liens in some cases.Believe me! I see it every day! Some of these people should be prosecuted-not bailed out. Especially on investment properties.It equates to making a bad investment in the stock market and then having the government force the broker to return all your money because you thought you were going to make a killing and unfortunately it didn’t turn out that way. 

    • I do not believe Sheila is naive in the least.  She is very brilliant and is, no doubt, using easily verifiable events  to demonstrate the frustration she dealt with in an Administration where its leaders intentionally “exaggerated” the projected the results of its programs and refused to include those who did not believe in knowingly and intentionally “exaggerating” in order to produce an atmosphere of “HOPE.”

string(99) "https://reversemortgagedaily.com/2012/09/26/former-fdic-chief-some-obama-housing-policy-was-stupid/"

Share your opinion