Regulatory Capture.

Socialist Historian Gabriel Kolko documented that the regulatory agencies established to protect consumers from business quickly become captured by the business, whereupon they are then turned to protect the businesses from the consumers.

It seems like the Obama administration - ever arrogant, ever historically ignorant - fell into this trap with its morgage modification program:

Instead, Treasury just let banks implement the program using the same practices that caused the crisis in the first place. Where mortgage servicers had issued no-doc mortgages before the crash, Treasury allowed them to issue no-doc mortgage modifications after the crash.

And, surprise! The program was a complete failure. Of the 1.3 million mortgages modified by HAMP through June 2010, only 43 percent were converted to permanent modifications. Treasury did start requiring verified income documentation after that date, but the final numbers are not impressive either. As of June 2012, only 1 million mortgages had been permanently modified, far less than the 4 million Obama had promised.

Worse, as Barofsky's book notes, Treasury's failure to help more families was a feature, not a bug, of the HAMP program. "HAMP would 'foam the runway' by stretching out foreclosures, giving the banks more time to absorb losses while the other parts of the bailouts juiced bank profits," Barofsky writes. "Helping banks, not home owners, did in fact seem to be Treasury's biggest concern."

Barofsky's book was not the first clue out of the Treasury Department that HAMP was designed to help banks, not homeowners. Geithner admitted as much to a gathering of friendly financial bloggers back in August 2010, prompting Media Matters Senior Fellow Duncan Black to write, "[I]f you do liberalism badly then people get it in their heads that maybe liberalism is pretty sucky. The economy sucks and HAMP was a complete failure, whether deliberately or not, and that's what people know."

The headline of Black's post: "When Liberalism Doesn't Work It Discredits Liberalism.