We now know that government programs aren't doing much. Why not just give the private sector a nudge to move faster?
Dear Treasury Secretary Geithner,
First, kudos on your decision to stay on for the rest of your boss's term. I know Goldman is aching to get you on board, but you'll have plenty of time to make money when you're in your 50s. Now that you've committed to another year, let's talk for a minute about one of the most important problems you face: how to fix the housing market.
I'm glad to see that the Treasury has recognized two key facts about the housing market. For starters, the economic recovery won't take off until housing has hit bottom and begun to rebound. And as far as what Washington has done to try to fix the market up to now, none of it's working.
What Isn't Helping
Let's learn from those lessons, shall we?
Lesson #1: Be Aggressive -- Little Carrots Don't Work
Your Home Affordable Modification Program ("HAMP") had so much promise. It sought to prevent between 7 and 9 million foreclosures! That was ambitious, and well, it won't even come close. You guys will struggle to break a million permanent modifications.
Honestly, I was a little surprised at just how poorly the program performed. When the details came out, I thought that servicers would jump at the opportunity to get free money from the government to modify mortgages that would just have ended in foreclosure anyway. But it turns out that the carrots you offered weren't big enough. So whatever action you take, it must be aggressive.