FDIC Chairman Sheila Bair (Photo by Chip Somodevilla/Getty Images)

President-elect Barack Obama insists he will protect Main Street, not just Wall Street, when fashioning a federal response to the credit crisis.

Perhaps so. Perhaps his “one president at a time” rule is causing his economic team to hold back on a commitment to helping ordinary American families who are facing foreclosure.

Right now the same regulators and advisors — sponsored by Republicans and Democrats alike — who helped cause the crisis are in charge of fixing it. Their willingness to gamble with taxpayer money so far has been devoted to bailing out financial firms and speculators who brought the world economy to the brink.

Little has been done for homeowners, 10 percent of whom either are late in their mortgage payments or in foreclosure. Nothing is planned for those who stayed current on their mortgages but who now see the tax base of their communities eroding and their home values plunging.

Indeed, the insiders are intent on forcing out the one federal official who has aggressively pursued a sensible and aggressive plan to protect consumers: Sheila Bair, chairman of the Federal Deposit Insurance Corporation.

For years Ms. Bair has suggested modifying mortgages on a mass scale, pushing lenders and firms that service loans to cut rates and lower the principal owed on loans to bring monthly payments into line with people’s ability to pay.

Her plan would keep people in their homes. In the long run it would save lenders money, too, because working out a loan usually is cheaper than foreclosing and re-selling a home in a depressed market.

Ms. Bair’s plan hasn’t sat well with Wall Street or its Washington enablers. Among the firms most ardently opposed to the plan is Citigroup. When Citigroup came hat in hand seeking federal relief to stay afloat, Ms. Bair said the FDIC would not participate in a bailout unless Citigroup agreed to participate in a mortgage modification program.

This has landed her in hot water with the insiders — including, according to news accounts, Timothy Geithner, head of the Federal Reserve Bank in New York and Mr. Obama’s choice to become Treasury Secretary.

The insiders want Ms. Bair out, with anonymous sources whining to The New York Times that Ms. Blair’s “high profile campaigning is meant to promote herself while making them look heartless.”
Foolish and irresponsible is more like it.

The insiders, for example, have launched a transparently phony information campaign against Ms. Bair’s initiative. John C. Dugan, who as Comptroller of the Currency regulates 1,700 national banks, recently released data that he says show that more than half of loans modified in the first quarter of 2008 fell delinquent within six months.

Those data, though, ignore the most logical  explanation for failed refinancings: The same lending industry that recklessly damaged the nation’s credit markets now is showing the same incompetence when administering mortgage refinancings. The results might be different with tougher rules for lenders and strong enforcement of lending practices.

Washington and Wall Street have been backing a program called “Hope for Homeowners,” holding out the promise that families struggling to meet monthly payments might be able to obtain refinancing they can afford.

But Hope for Homeowners is a joke, arguably even a fraud. Financial institutions are not obligated to participate in the program. None have taken it seriously.

The program attempts to deal with mortgage problems one borrower one at a time, an approach that is insultingly unrealistic. Before the Hope for Homeowners program administrators can get around to them, thousands of American families who might be good candidates for refinancings will lose their home to foreclosure.

This week, the Bush Administration’s secretary of Housing and Urban Development, Steve Preston, admitted the program is a failure — but ducked responsibility and pointed the finger at Congress.

Perhaps Mr. Obama is waiting to take office before he shakes things up. But that may be too late for thousands of homeowners. If he’s serious about “change,” he needs to make sure his economic team gets the message.