Last November, Andrew Jakabovics and I reported that Bank of America was siphoning borrowers into its own private mortgage modification program before determining whether those borrowers qualify for the Obama administration’s Home Affordable Modification Program (HAMP), in clear violation of the bank’s HAMP contract with Treasury. And as it turns out, according to an investigation by ProPublica, this and other in-house modification programs run by the nation’s biggest banks are a substantively worse deal for borrowers than government supported programs:

A ProPublica analysis of regulators’ data shows that, compared to modifications in the government program, banks’ own modifications are less likely to reduce interest rates, less likely to defer principal and more likely to actually increase monthly payments. [...]

ProPublica’s analysis found that almost 80 percent of the government modifications reduced monthly payments by more than 20 percent, whereas fewer than 40 percent of proprietary modifications made such reductions. Fifteen percent of proprietary modifications actually increase the monthly payments, typically because the modifications added past-due interest and other fees to the loan’s principal.

HAMP has been a pretty big flop, with only $600 million of the $50 billion dedicated to the program actually getting out the door, and with more borrowers getting dropped from the program than successfully receive a permanent mortgage modification. But private modifications are clearly a bad deal, particularly if they are actually increasing the monthly amount a borrower owes! And as HAMP has failed to get off the ground, borrowers have found themselves sucked into private modifications, for lack of better options.

Private modifications currently outnumber government modifications four to one, which is just one more reason that the administration needs to be looking at ways to streamline HAMP and get more borrowers through the program successfully. The Center for American Progress, for instance, has proposed allowing housing counselors to approve HAMP modifications, and if the bank doesn’t challenge the modification in three months, it automatically becomes permanent. This would help eliminate a lot of the foot-dragging in which the banks currently engage when it comes to HAMP.

Another idea for preventing foreclosures is ramping up automatic foreclosure mediation programs, which have been successful across the country. Mediation — which means that a bank must actually meet with a borrower, face-to-face, to make one last-ditch effort at striking a deal before a foreclosure is finalized — been keeping borrowers out of foreclosure in Philadelphia, Connecticut, Maryland and New York. Alon Cohen has laid out a set of best practices for mediation programs here.

Republicans have been having a hard time recently squaring their stated desire to balance the budget without raising taxes with the stark reality that most of the budget is composed of entitlements and defense spending, which they are loathe to say they want to cut. Yesterday, Sen. Jim DeMint (R-SC) put this on full display, endorsing Rep. Paul Ryan’s Roadmap for America’s Future — which is an attempt to balance the budget via draconian cuts to Medicare and Social Security — moments after telling NBC host David Gregory that such entitlement cuts are “not on the table”:

DEMINT: Well, no, we’re not talking about cuts in Social Security. If we can just cut the administrative waste, we can cut hundreds of billions of dollars a year at the federal level. So before we start cutting — I mean, we need to keep our promises to seniors, David, and cutting benefits to seniors is not on the table. Excuse me, let me grab a sip of water.

GREGORY: But then, but where, but where do you make the cuts? I mean, if you’re protecting everything for those, the most potent political groups like seniors who go out and vote, where are you really going to balance the budget?

DEMINT: Well, look at Paul Ryan’s Roadmap to the future. We see a clear path to moving back to a balanced budget over time. Again, the plans are on the table. We don’t have to cut benefits for seniors, and we don’t need to cut Medicare.

Watch it:

DeMint is either ignorant as to what the Roadmap actually says or he is willing to totally mislead his audience, as the Roadmap is an explicit attempt to balance the federal budget via severe cuts to Medicare and Social Security:

The Ryan plan would eliminate traditional Medicare, most of Medicaid, and all of the Children’s Health Insurance Program (CHIP), converting these health programs largely to vouchers that low-income households, seniors, and people with disabilities could use to help buy insurance in the private health insurance market. Under Ryan’s plan, the value of the vouchers would fall further behind the rising cost of health care with each passing year, so they would purchase less health coverage over time. By 2080, Medicare would be cut 76 percent below its projected size under current policies. [...]

The Ryan plan proposes large cuts in Social Security benefits — roughly 16 percent for the average new retiree in 2050 and 28 percent in 2080 from price indexing alone — and initially diverts most of these savings to help fund private accounts rather than to restore Social Security solvency.

And after all that, Ryan’s Roadmap still wouldn’t balance the budget (even as it raises taxes on 90 percent of Americans). So is DeMint willfully ignorant as to the plan’s practical implications or is he simply trying to paper over the fact that Republicans don’t actually care about the budget deficit?

Politico’s Morning Money reported today that Rep. Melissa Bean (D-IL) — whose race with Republican Joe Walsh is still too close to call, nearly one week after Election day — is being floated as a possible director for the newly created Consumer Financial Protection Bureau:

Buzz on Friday had Rep. Melissa Bean (D-Ill.) possibly getting tapped as the first Consumer Financial Protection Bureau head depending on the outcome of her too-close-to-call reelection race, in which Republican Joe Walsh maintained a slight lead as of Sunday afternoon. But a possible Bean nomination is not sitting well with reformers on the left who say the moderate Illinois congresswoman is far too close to the banking industry. Said one administration official: “It’s not clear she would be acceptable to the reformers.”

The current head of the CFPB, Harvard Law Professor Elizabeth Warren, is technically a special adviser to the President, so the agency will need an official director when it stands on its own in July 2011. (At the moment, it is still considered part of the Treasury Department.) Politico doesn’t source its report, so let’s take this with a grain of salt, but going from Warren, a staunch consumer advocate who has been taking on Wall Street for years, to Bean, a bank-friendly Democrat who actively tried to gut consumer protection provisions from the Dodd-Frank bill passed last year, would be a terrible shift.

Bean is one of the leaders of the New Democrats, a group of House Democrats who have cozied up to Big Business and Wall Street, turning them into a fundraising powerhouse, as described by ProPublica. Bean — a member of the House Financial Services Committee — has raised $2.5 million for her own campaigns from the finance industry, and that sector was far and away her largest contributor in 2010.

Bean’s main contribution to the financial reform debate was attempting to water down a key provision of the Dodd-Frank legislation, and give banks more leeway to take advantage of consumers. Under Dodd-Frank, states are allowed to enact consumer protection laws above and beyond those set at the federal level, giving their citizens additional protections if they see fit. A provision that Bean proposed would have exempted national banks from these enhanced standards, giving states no incentive to enact stronger protections, lest they disadvantage their own community banks.

Bean’s push for federal preemption shows that she is far more concerned with the ability of banks to make profits than she is with protecting consumers from bank excess. While she was at it, she helped the New Democrats try to blow derivatives regulation full of holes, gutted a bill aimed at limiting bonuses at banks that took TARP money, and had her chief of staff depart for the Chamber of Commerce, where he lobbied against financial reform. That’s not the record a director of the only federal agency explicitly tasked with protecting consumers should have.