Geithner Slams Banks For Not Helping Homeowners, Says Treasury Concerned About GM Ad

ABC News’ Matthew Jaffe reports:

Treasury Secretary Tim Geithner today ratcheted up criticism that banks have not been doing enough to help struggling homeowners avoid foreclosure under the administration’s embattled $75 billion housing aid program known as HAMP.

“We are troubled by reports that servicers have foreclosed on potentially eligible homeowners, or that they have steered these borrowers away from HAMP and into the banks’ own modification programs, that they have lost documentation, or claimed to lose documentation, and that they are not responding to the needs of responsible and increasingly desperate homeowners,” Geithner told the Senate Appropriations Subcommittee on Financial Services & General Government. “None of this is acceptable. And we are working very hard to make sure servicers do a better job in holding up their end of the bargain.”

The panel’s chairman Dick Durbin said banks are giving homeowners the run-around, asking them to submit documents time and time again.

“These servicers keep telling people, ‘Do it all over again, do it all over again,’ trying to wear them out,” Durbin said.

Geithner replied that starting in June or July Treasury will start releasing “a very detailed set of data” on the performance of each mortgage servicer.

“We are going to do it bank by bank,” he said.

To date the program has only helped 230,000 homeowners obtain permanent loan modifications.

Lawmakers at today’s hearing also voiced concern about General Motors’ recent repayment of the remaining $4.7 billion in debt that it owed to the government from funds it received under the Troubled Asset Relief Program.

The panel’s ranking Republican Susan Collins cited a GM commercial that boasts that the automaker has repaid its “government loan in full with interest five years ahead of the original schedule.”

“If in fact – as the Special Inspector General for the Troubled Asset Relief Program has told me – GM has used one pot of federal money to pay back another federal loan, then I think that it is very misleading,” Collins said.

Treasury has denied that claim, but Geithner today responded that while he had not seen the commercial, his agency was concerned about the GM ad.

“I’ve heard the same concerns expressed in my building,” he said.

Collins later asked a watchdog – deputy SIGTARP Kevin Puvalowski – if GM had simply used TARP funds to repay TARP funds.

“Yes,” Puvalowski replied. “The source of the funds came from an escrow account that was funded with TARP funds in the first place. The vast majority of the taxpayers’ investment in General Motors remains outstanding.”

- Matthew Jaffe