A Project By Any Other Name

Hank Paulson is the Don Quixote of the subprime debacle – he never seems to run out of windmills at which to tilt. Now, he’s put together a group including B of A, Citi, JPMorgan Chase, Wells Fargo, Washington Mutual (WaMu) and Countrywide to back “Project Lifeline,” which would impose a 30-day freeze on foreclosures while the lenders consider modification of loan terms for borrowers facing the loss of their homes.

Without doing so publicly – Hank would never admit to failure – Paulson appears to be acknowledging, through the new venture, that “Project Hope” did not go far enough in providing relief to homeowners facing foreclosure. That relief has been slow to come, drawing fire from Congress (which itself acted with deliberate slowness in passing the fiscal stimulus package, due to the presidential campaigns of three Senators, but that’s different). So now Paulson is urging lenders to go beyond Project Hope’s five-year rate freeze. Project Hope, Project Lifeline … what’s next, Project Resuscitation?

A spokesperson for the Center for Responsible Lending saw that the emperor is naked, and showed no fear in saying so: “This is good, but we’ve seen this over and over again. The fact that they keep having to roll out subsequent rescue plans every few weeks underscores that each plan is inadequate.” You have to love the line-up Paulson has assembled to execute the plan: Citi, WaMu and Countrywide are down an average 66% since the beginning of 2007; B of A, Wells Fargo and JPMorgan have fared better, only losing an average 16% over that span. Yeah, this is the "Dream Team" that I'd want saving America from wretched subprime excess.