The Times Looks at Bush’s Homeowner Advocate

The New York Times takes a nuanced look at FDIC Chairwoman Sheila Bair this morning. She’s the Bush administration member who’s been loudest about the need to bail out homeowners since we’re bailing out Wall Street with trillions of dollars. And she’s taking fire, some of it justified, from others in the administration.

This is a good scoop:

White House and Treasury officials argue that Mrs. Bair’s high-profile campaigning is meant to promote herself while making them look heartless. As a result, they have begun excluding Mrs. Bair from some discussions, though she remains active in conversations where the F.D.I.C.’s support is needed, like the Citigroup rescue.

While Bair has gotten lots of good press for casting her lot with homeowners, the Times is good to check up on how these programs are doing. Terrible, it turns out:

quickly aid millions of homeowners at a reasonable cost. Mrs. Bair unveiled a program to help the 65,000 borrowers who are more than two months delinquent on their mortgages at IndyMac, the giant failed bank taken over by her agency this summer. But so far, that program has benefited only 7,200 people.

A representative of IndyMac said that many of the overdue loans turned out to be ineligible for the program, and that some borrowers had not yet responded to the bank’s modification offers.

Other efforts have also stumbled. A $300 billion foreclosure prevention program passed by Congress this summer to help up to 400,000 homeowners wound up larded with requirements, like requiring background checks and restricting eligibility for mortgage relief to people at risk of foreclosure as of March 1.

As a result, fewer than 200 people have applied for the program since it opened in October…

If there’s a flaw with the story it’s that it leaned too much on administration critics of Bair. But it balances that out by letting the administration embarrass itself:

“Every one of these programs seems like a great idea at first,” said Tony Fratto, the White House deputy press secretary. “Our concerns are that many of them pay off people who knowingly made bad decisions and lenders who created the subprime crisis. It’s unquestionable that rewarding those people lacks support among the American people.”

Neat little trick there, combining borrowers with lenders. But the lenders (or lots of them, anyway) are already getting bailed out by the very same government.

And this is a shame:

“It’s become clear that if you stick your head up, it’ll get cut off,” said one White House official. “We’re done in two months. The next administration can try to find a way out of that maze.”

That will probably come too late for Ms. Middleton, whose home is scheduled to be sold this month.

Nice work by the Times.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.