It's starting to look like Neil Barofsky and Timothy Geithner are never going to get along.
In a Monday column for Reuters, Barofsky, the former special inspector general for the Troubled Asset Relief Program, more or less called Geithner, the secretary of the U.S. Treasury and Barofsky's frequent sparring partner on matters of financial policy, a big, fat hypocrite.
Barofsky's latest beef is that Geithner has recently called upon the Federal Housing Finance Agency, and its intransigent acting head Ed DeMarco, to make with the principal reductions already, so that troubled borrowers whose home loans come through Fannie Mae and Freddie Mac can get out from under their debts and avoid foreclosure.
It's not that Barofsky doesn't agree -- he writes that he's "championed principal reductions for years" -- but he's steamed that Geithner is arguing this position now, when the Treasury secretary previously held that principal reduction programs were a bad idea and could open the door to abuse. Given that it's an election year and all, Barofsky writes, Geithner's newfound pro-homeowner stance looks an awful lot like "political posturing."
We should probably take any exchange between these two with a grain of salt, since they have a history of friction. Barofsky released a book earlier this summer, called "Bailout," in which he criticized what he called Geithner's "brusque style," accused the secretary of trying to bigfoot the inspector general's authority, and noted that every now and then Geithner would turn the air blue with curse words.
It's hard to see how Barofsky calling out Geithner for a flip-flop does very much to help the country's distressed borrowers. Principal reductions through Fannie and Freddie, on the other hand, do at least stand a chance of putting a brake on the national foreclosure crisis. The FHFA itself has estimated that such a program could help as many as half a million borrowers, and save up to a billion dollars in taxpayer money.
Who is for and against principal reduction? Find out below.