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« Elizabeth Warren On The Next Real Estate Crisis (VIDEO) | Main | Lies Divide, Truth Unites (Guest Post From Dylan Ratigan) »

Elizabeth Warren Grills Geithner, Criticizes Treasury's Foreclosure Program (PBS News Hour Interview)

PBS Video:  Elizabeth Warren News Hour Interview -- June 22, 2010

Warren's response to Geithner.  Excellent interview.  Transcript is inside.


NOTE:  To skip to the next video, click the red arrows that surround the story headline above.


Judy Woodruff talks with Dr. Warren, chair of the Congressional Oversight Panel about the effectiveness of the TARP bank bailout and Treasury's program aimed at helping homeowners avoid foreclosure.

JUDY WOODRUFF: We heard Secretary Geithner say today he thinks the TARP program has worked remarkably well. Taxpayers are getting most of their money back. Should that be the main measurement of its success?

ELIZABETH WARREN: Well, it should be one of the measurements.

And, look, it's always part of the measurement that the initial action very well may have pulled us back from the brink of a depression. The big question is, what are we going to do with the money now? TARP is winding down. There's three more months to figure out whether or not we actually have adequate stability in the financial institutions and what to do about home mortgage foreclosure.

We only have this limited period of time to adjust the programs, to change the programs to try to deal with those problems.

JUDY WOODRUFF: Well, let me ask you about the home mortgage foreclosures. You had a very animated exchange with the secretary over that question.


JUDY WOODRUFF: He says the success, as we heard him say, can be measured family by family, that it was never intended to help everybody.

ELIZABETH WARREN: Well, you know, no one disputes that. Of course it was never intended to help everybody. But it was intended to help somebody.

The problem we have got -- let me put it this way. This is a program that is saving a tiny number of people, ultimately, by getting them into affordable mortgages that the estimates are they will be able to sustain over time.

And for every one of those families that goes in, there are many, many more families who never make it. And the kinds of numbers we're looking at, we're looking at mortgage foreclosures that stay well over a million families this year, next year, the year after that, the year after that.

That has implications, not only for those families, but for the financial institutions that are holding those mortgages, for the construction industry, for our overall economy. We have a serious problem and a limited amount of time to get ahead of it. HAMP is not getting ahead of it.

JUDY WOODRUFF: The government's current -- that's the name of the program.


JUDY WOODRUFF: And what's your understanding of why the government -- why the administration, why the Treasury Department isn't doing more?

ELIZABETH WARREN: It is -- it's as if we had a boat that's taking on gallons of water, and they're trying to bail it with a teaspoon.

And, actually, I will give you an example of that. This program has now been in effect for 15 months. It has an allocation to try to deal with a very large problem. The allocation is $50 billion. And, so far, they have actually spent less than $200 million on mortgage foreclosure relief.

It is a -- it is a badly designed program that, from the beginning, was too small, too slow, couldn't be scaled up.

JUDY WOODRUFF: Elizabeth Warren, you also expressed concerns today about the number of banks that you said are dangerously exposed to commercial real estate loans. What did you make of Secretary Geithner's answer on that?

ELIZABETH WARREN: Well, you know, he said he's comfortable. And I'm -- I just have to worry.

We have 3,000 of the 8,000 banks in the United States, by the definition of their own regulators, are dangerously exposed on commercial mortgages. We see a problem that's coming that's getting bigger in the years ahead. And six of the 19 stress-tested banks -- just to give you an idea about concentration, six of the 19 stress-tested banks have commercial real estate mortgage portfolios that are larger than their Tier 1 capital.

This is an area -- just to give you an idea, by the end of this year, commercial real estate mortgages will have shrunk in value, the property underlying those mortgages, by about 50 percent. Well, this is a big problem. And it's a problem in our future, not in our past.

JUDY WOODRUFF: And I listened to your exchange with the secretary on that. And he didn't seem to be nearly as concerned as you are. And is this a definitional difference here, as much as anything else? How do you explain it?

ELIZABETH WARREN: Well, you know, I do have to say, I really wish that the secretary had said, your numbers are wrong. Here's some part of it you're not seeing.

Instead, what he said is, the problem isn't as bad as we thought it was going to be.

JUDY WOODRUFF: Separate question. The financial regulatory reform legislation moving through Congress, it came up today at the panel several times. I know it's not -- it's not officially under your purview as chair of this panel, but as someone who studies the financial sector, what do you think is good about what's moving through Congress, and what do you worry about?

ELIZABETH WARREN: I think the Consumer Financial Protection Agency is good. You know, we don't know until the final details are there, but it is a strong agency. It's right up to the edge. You take much more away from it, and it won't be enough to get the job done.

Right now, the big issue on that, it is whether or not car dealers ought to have an exemption, not have to follow the same rules of disclosure and honesty in their loans that everyone else is going to have to follow. But the consumer agency looks good.

The other pieces, in the right direction. The real question is whether they push hard enough, whether we get enough done in this round of reform.

JUDY WOODRUFF: And what would be your definition of enough?

ELIZABETH WARREN: Well, enough that we feel like we have wound real risk out of the system. And that's hard to do.

You know, we always have to remember what it was that brought us this crisis in 2008. We talked about concentration in the financial services industry. Here we are, two years later, and the industry is more concentrated. The big are bigger. And there are fewer small banks, so we have less diversification in the industry.

We have not yet dealt with the problems of derivatives with these shadow markets that impose a lot of risk on the overall financial system, and not on the rest of us. Until we deal with that, we -- we continue to live at risk.

JUDY WOODRUFF: And will your panel be hearing from Secretary Geithner again, before TARP expires in October and before your panel expires next spring?

ELIZABETH WARREN: We will certainly invite him. And that's the best we can do. I call on a regular basis and ask if he will come to talk with us.








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Reader Comments (18)


Prepared statements from Geithner and Warren...
Jun 23, 2010 at 1:48 AM | Registered CommenterDailyBail
WASHINGTON (MarketWatch) -- Top House and Senate negotiators on a committee to work out differences in sweeping financial-regulatory bills have agreed to house a new consumer financial protection bureau within the Federal Reserve, according to a release from a key lawmaker on Monday.

Jun 23, 2010 at 1:52 AM | Registered CommenterDailyBail
Consumer agency will clarify financial products' costs, terms

Economic crisis started 'one lousy mortgage at a time,' says Elizabeth Warren

Jun 23, 2010 at 1:53 AM | Registered CommenterDailyBail
Double dip -- or double take?

Commentary: Double-dip recession not a sure thing

Jun 23, 2010 at 1:55 AM | Registered CommenterDailyBail
IRS Blocks Almost 10% of First-Time U.S. Homebuyer Tax Credits After Audit
The Internal Revenue Service blocked almost 10 percent of U.S. claims for the first-time homebuyer tax credit after receiving erroneous or fraudulent filings, according to a report today

Insurers Raise Individual Health Premiums an Average 20%, Kaiser Says

and this is the TNT Bomb:

Fannie Mae Increases Penalties for Borrowers Who Walk Away
Seven-Year Lockout Policy for Strategic Defaulters
Jun 23, 2010 at 2:41 PM | Unregistered CommenterKen
I wonder why TARP pretty much refuses to help private banks...
Jun 23, 2010 at 2:56 PM | Unregistered CommenterGrant Hammond

What if there were no armies...
Jun 23, 2010 at 3:11 PM | Unregistered CommenterKen
Dear Bankers: It’s Not a Communication Problem
Federal Reserve Statement In English
Jun 23, 2010 at 3:27 PM | Unregistered CommenterKen
Birds of a feather were meant to flock together...

Barack Obama finally makes his peace with Bill Clinton

I miss the days of old...

Bill on Obama...WHAT FUN...


Jul 18, 2010 at 2:57 PM | Unregistered CommenterZ
Jul 18, 2010 at 3:01 PM | Unregistered CommenterZ
"Fannie Mae Increases Penalties for Borrowers Who Walk Away
Seven-Year Lockout Policy for Strategic Defaulters"

Another TOOTHLESS THREAT, considering the articly also says, " Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe". Not to mention the fact that Fannie Fraud is BROKE and probably won't even be around by NEXT YEAR, never mind 7 years from now.
Jul 18, 2010 at 3:02 PM | Unregistered CommenterRecoverylessRecovery
Here's what I'm talking about:

"We heard Secretary Geithner say today he thinks the TARP program has worked remarkably well. Taxpayers are getting most of their money back. Should that be the main measurement of its success?"

TARP has worked remarkably well for who? From October 3, 2008 when TARP was signed by Bush until today, the public debt has increased $3.05 Trillion, approximately $10,000 for every man, woman and child in America.

Guess who we're paying the interest on that debt to? The banks we borrowed it to save. So instead of them owing us, we owe them. Brilliant.

Warren just tap dances around the question.
Jul 19, 2010 at 12:33 AM | Unregistered Commentermark mchugh
She is in line for the Credit Card Czar for the new Democrat finance bill, maybe she doesn't want to risk the promotion.
Jul 19, 2010 at 12:58 AM | Unregistered CommenterZ
Next bailout for the banks, extend and pretend.
Jul 19, 2010 at 1:13 AM | Unregistered CommenterZ

50 million down on a 7 billion purchase

one building has now gone from 1.7 billion to 600 million

50% vacant space

the other shoe about to drop
Jul 19, 2010 at 1:26 AM | Unregistered CommenterZ
Don't worry, this will cheer you up...

Jul 19, 2010 at 1:32 AM | Unregistered CommenterZ

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