Last week, Pennsylvania Avenue in Washington, D.C., became something of a street of shame. At one end of the celebrated thoroughfare, efforts were announced that were designed to heap ridicule on those who are not deserving of such actions. At the other end, a surprise figure popped up to call attention to a less-than-stellar official whose job performance is overdue for some serious questioning.

Let's start at the avenue's most famous residence. The White House is clearly not happy about the progress of its loan modification efforts to aid at-risk homeowners. So how is administration going to encourage more vigor in this endeavor? It appears the solution lies in shame.

To be more specific, the administration has directed the Department of the Treasury to begin publicly naming the financial institutions that it feels are moving too slowly to permanently lower mortgage payments. Many of the modifications have only been temporary, but that's not good enough. To drive its point home, the Treasury will not pay out any of the promised cash incentives to the financial institutions under the Home Affordable Modification Program (HAMP) until its new demands are met.

Michael Barr, the Treasury's assistant secretary for financial institutions, told the New York Times that servicers handling loan modifications need to ratchet up their efforts. "The banks are not doing a good enough job," he said. "Some of the firms ought to be embarrassed, and they will be."

Uh, hello? HAMP is not a factory order strategy - there is a difference between demanding X-number of widgets and X-number of modified home loans within a specific time frame. It is an unrealistic approach to an unprecedented problem.

Furthermore, we have to wonder whether the federal government has its numbers right. A Congressional Oversight Panel report from October, which used Treasury data from September, indicated that fewer than 2,000 permanent modifications had been executed up to that point. However, in November, Ocwen Loan Servicing's Paul Koches told Servicing Management's John Clapp that his company had performed 3,039 permanent modifications. Hmmm, someone doesn’t know how to count - and I suspect that someone doesn’t work at Ocwen.
 
It is atrocious that the administration is calling the servicing industry to task, since that sector was hardly responsible for the economic crisis. But at the other end of Pennsylvania Avenue, someone who carried more than a little responsibility is finally being held up for harsh examination.

That someone is Federal Reserve Chairman Ben Bernanke, who was nominated for a second term by Pres. Obama. If Bernanke was expecting smooth sailing, he was surprised at what he faced.

In a genuine out of left field moment, Vermont Sen. Bernard Sanders said he would put a hold on the Bernanke nomination, thus requiring the confirmation to go outside of the Senate Banking Committee and into the full Senate to achieve a 60-vote majority confirmation. Sanders explained his action to the New York Times by stating, "Clearly, this guy is part of the problem. I hope the president will give us a new nominee."

Although Sanders is officially registered as an Independent, he has stated his political views were "democratic socialist." In this case, politics is making very strange bedfellows - the Wall Street Journal, not exactly a beacon of democratic socialism, is allied with Sanders, stating that Bernanke is not deserving of a second term.

The Sanders action will allow more time for the Senate to dissect how the Fed chairman responded to the economic crisis. Hopefully, there will be some blunt discussions of Bernanke's erratic performance - let's not forget his insistence more than two years ago that the subprime meltdown was contained and would have no effect on the wider economy, or his more recent assertion that the recession appears to be winding down.

Bernanke has a lot to answer for, and I hope that the Senate doesn't squander its chance to provide a strong review of his work. Unlike the servicers who are getting scorn and ridicule at the far end of Pennsylvania Avenue, Bernanke could use more than a little shaming to explain where his judgment went very wrong.

- Phil Hall, editor, Secondary Marketing Executive

(Please address all comments regarding this opinion column to hallp@sme-online.com.)