For two years now, the National Labor Relations Board (NLRB) — which is responsible for mediating disputes under the National Labor Relations Act — has been stuck with only two of its five members in place. This is an significant problem, because there’s a serious legal challenge to the NLRB’s authority to issue rulings with just two members.

Yesterday, the Supreme Court heard arguments in New Process Steel v. National Labor Relations Board, and if the decision goes against the NLRB, more than 600 cases that the shorthanded board has decided could be thrown out.

The Obama administration has actually nominated members to the board, including former AFL-CIO and SEIU attorney Craig Becker, but Senate obstruction has prevented them from moving forward. Conservatives have decided that Becker’s nomination is a proxy battle for the Employee Free Choice Act (EFCA), believing that Becker will somehow institute EFCA all by himself, which is, of course, nonsense.

This obstruction has led the administration to hint that it may recess appoint Becker. And during oral arguments at the Supreme Court yesterday, Chief Justice John Roberts essentially agreed that recess appointments are the way to go:

NEAL KATYAL, DEPUTY SOLICITOR GENERAL: They were named in July of last year. They were voted out of committee in October. One of them had a hold and had to be renominated. That renomination took place. There was a failed quorum — a failed cloture vote in February. And so all three nominations are pending. And I think that underscores the general contentious nature of the appointment process with respect to this set of issues.

CHIEF JUSTICE ROBERTS: And the recess appointment power doesn’t work why?

Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-IA) said yesterday that he expects a recess appointment for Becker to occur. “It’s going to happen,” he said. A group of 20 business lobbying groups, led by the Chamber of Commerce, wrote Obama yesterday to advocate against a recess appointment, so they seem to be legitimately worried such an appointment will happen

If this is indeed the route Obama has to go, then he should. It’s unacceptable for the board that mediates labor disputes to be hobbled for so long and for Republicans to hold up the nominations over their disapproval of an unrelated piece of legislation. As Michael Whitney put it, “each time the right picks a fight with Becker, [TSA Nominee Errol] Southers, or the Employee Free Choice Act, both corporations and the right directly benefit from one fewer chance for workers to exercise their rights.”

Plus, Roberts’ line of questioning seems to indicate that he is leaning toward throwing out all of the hobbled NLRB’s decisions, making it that much more important that the board return to full strength.

When it launched the Home Affordable Modification Program (HAMP) back in April, the administration hoped that it would provide mortgage modifications for 3 to 4 million borrowers. But according to a new report from the Special Inspector General for the Troubled Asset Relief Program (TARP) — from which $50 billion of HAMP’s money comes — the program is only going to reach 1.5 to 2 million borrowers, due to a variety of design flaws and changing economic circumstances.

So far, HAMP has only resulted in 168,708 permanent loan modifications, which is nowhere near enough to keep up with the rate of foreclosures. of course, we’ve known for a while that HAMP was hobbled by its reliance on incentives for banks to modify loans, without any real consequences for banks that drag their feet.

However, the movement of the foreclosure crisis from subprime loans to prime loans has also turned the foreclosure problem into one that HAMP was not designed to deal with, as it was originally aimed at only those stuck in unsustainable subprime loans, not “underwater” loans, where the borrower owes more than the home is currently worth. And according to the Inspector General’s report, a large proportion of HAMP borrowers are underwater:

During the course of our audit work SIGTARP was not able to obtain documentation to support the different estimates as to the weighted average of the combined mortgage loan amounts compared to the home’s value for all borrowers in HAMP trial modifications, but the numbers all indicate that the average HAMP mortgage is underwater. For example, Fannie Mae reported to SIGTARP that the ratio was 247 percent through November 2009, which Treasury has “corrected” to 140 percent. Treasury currently estimates that the ratio is 114 percent.

In plain English, this means that, even according to the most optimistic estimates, the average borrower in HAMP owes $1.14 for every $1 that their house is worth, and Fannie Mae thinks the ratio is more like $2.47 for every $1. For borrowers who find themselves that far underwater, HAMP will do nothing but prolong the time before they fall into foreclosure, as in the vast majority of cases, it only reworks monthly payments, not the total mortgage amount.

So the obvious remedy is to implement a program to reduce mortgage principals. Technically, HAMP allows for principal reductions, but these occur in less than 2 percent of cases. The administration is trying a pilot program in which it will give states funds to implement principal cuts, if they choose, while FDIC Chairman Sheila Bair is also looking at ways to force principal cuts. So the administration is well aware of the problem, but has yet to find a wider, workable solution. And unless a way to do this is found, as SIGTARP’s report summed up, we’ll be left relying on a program “that merely kicks the proverbial foreclosure can down the road.”