Yesterday, the House Financial Services Committee held a hearing to examine problems with the Home Affordable Modification Program (HAMP), which is the cornerstone of the administration’s Making Home Affordable program. HAMP has sputtered since its inception, with trial mortgage modifications not even keeping up with new foreclosure starts.

One of the main factors holding back HAMP is that servicers have been dragging their feet in getting eligible borrowers into the program (partially because there is no disincentive to gumming things up), and then failing to turn trial modifications into permanent ones. To try and get to the bottom of things, the committee brought representatives of Bank of America and JP Morgan Chase in to testify, and both banks claimed that, actually, the problem is borrowers can’t get their documents together:

JP Morgan Chase: The focus of our immediate attention is finding ways to assist the 51 borrowers out of 100 that are missing some or all of the documentation required under HAMP or where the documents are incomplete, not current enough or otherwise not acceptable under the HAMP rules.

Bank of America: Bank of America has approximately 65,000 customers who have made more than three trial modification payments on time and their modifications are set to expire on December 31, 2009. Unfortunately, 50,000 have either not submitted some or all of the required documents or have submitted all their required documents, but the documents reveal discrepancies that require an additional response from the customer. It is unclear why this has happened to such a high degree.

As ProPublica’s Paul Kiel pointed out, “the data from servicers should be viewed with skepticism, given another clear trend: Banks and other mortgage servicers are themselves not very good at managing documents.” Indeed, stories abound about workers submitting their documents, only to be run in circles by the servicers and asked to resubmit.

But there’s not just anecdotal evidence showing that some banks are having trouble navigating the program. After all, there are very large differences between different servicers in the program, with some, like Saxon and CitiMortgage, getting upwards of 40 percent of eligible borrowers into the program, while others struggle.

Bank of America has been participating in HAMP since April, but has trial modifications on just 14 percent of its eligible mortgages. Wachovia has trials on only 3 percent. US Bank, meanwhile, signed up for the program in September, yet has 15 percent of its borrowers in trial modifications.

Are Saxon’s, US Bank’s, and Citi’s borrowers just a lot more responsible than BofA’s or Wachovia’s? I find that hard to believe. BofA’s dumping the blame onto borrowers for its shoddy stats (though it did cite “shortcomings in document maintenance” as an exacerbating cause) is particularly galling, because, as Andrew Jakabovics and I reported, the bank is siphoning potentially HAMP-eligible borrowers into its own private modification program, in violation of its contract with Treasury.

Of course, there are bound to be borrowers who can’t get their documents together and therefore fall out of the program. But it’s completely irresponsible for the banks to pass the buck onto borrowers, when they can’t get their own houses in order. And this could all be remedied by the implementation of mandatory mediation programs, which require a servicer to actually meet with a borrower before finalizing a foreclosure. Oftentimes, mediation sessions result in a borrower previously thought to be ineligible for HAMP discovering that an administrative error has been made, and that he or she does in fact qualify.

Today, the House of Representatives is expected to begin debate on H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, which is the House’s effort to reform and update the country’s financial regulations. Prior to the bill even coming to the floor, Republicans are joining with the financial services industry in an attempt to scuttle it.

As Roll Call reported, “in a call to arms, House Republican leaders met with more than 100 lobbyists…on Tuesday afternoon to try to fight back against financial regulatory overhaul legislation.” According to a lobbyist who attended the meeting, “the message was [House Financial Services Chairman Barney] Frank and the Democratic majority are ruining America, ruining capitalism, and stand up for yourselves…[The lobbyists] said, ‘Look, you all oppose this bill, but only a few of you have come out publicly.’”

And the message seems to have taken hold, as Rep. Spencer Bachus (R-AL), the ranking member on the House Financial Services Committee, appeared on C-Span this morning to criticize H.R. 4173 as a job-killing assault on American freedom. He made it clear that the GOP is out to defend big banks as, when asked what Republicans would do differently, the first thing that came to Bachus’ mind was ditching the Democratic proposal to levy a “too big to fail” tax on giant financial institutions, in order to build a fund that would be used to unwind failing financial companies without taxpayer dollars:

The first thing, we don’t impose a tax. The Democratic plan imposes a bailout tax. It’s a $150 billion tax on large corporations in this country. $150 billion out of our economy right now is going to cost jobs. We don’t tax corporations in the event that other corporations, their competitors fail.

Watch it:

Notice Bachus’ sneaky substitution of “corporation” for “financial institution,” to make it seem as if lots of businesses would be subject to the tax. But let’s be clear: Google, Home Depot, and Boeing are not going to be paying into what is officially known as the Systemic Dissolution Fund. According to the legislative language, the levy is restricted to financial institutions with more than $50 billion in assets and hedge funds with more than $10 billion in assets.

The point of building up this fund is to ensure that, when a large, interconnected financial institution does go under, there is a pot of money — provided by the financial industry itself — with which to unwind the failing institution in an orderly way. As Frank has said, the point of this provision is to create a “death panel for banks,” ensuring that sick institutions don’t cling to life at taxpayer expense. But instead, Bachus and the GOP want to keep the big banks from paying for the cost of their failure.