The Obama administration's mortgage modification program is more than two years old. From the beginning, it's been apparent that the participating banks and mortgage servicers were breaking the program's rules. The administration has long argued it has little power to do anything about it. But now, after millions of homeowners have been rejected, the government has decided it's finally time to crack down.

On Thursday, the Treasury Department announced it would be withholding government subsidies to the country's three largest mortgage servicers, which are also among the U.S.'s largest banks: Bank of America, Wells Fargo, and JPMorgan Chase. The banks won't be getting more money until they show "substantial improvement."

"It's important that the Treasury is acknowledging servicer noncompliance," said Alys Cohen of the National Consumer Law Center, "but that's been a problem for two years." The action, while "better than nothing," underscored the fact that many homeowners had been hurt during that time, she said.

Earlier this year, we reported extensively on Treasury's lax oversight of the program, including its reluctance to penalize banks. Treasury gave us a variety of reasons for that reluctance: that the government's power was actually quite limited, for example, or that if Treasury did penalize the banks, their performance would get even worse or they'd drop out of the program.

From almost the beginning of the program in 2009, Treasury has been sending mixed messages about its ability to penalize banks. In late 2009, Treasury warned in a press release that banks could face "monetary penalties and sanctions" for not abiding by the program's guidelines. But a spokesperson later told us that Treasury didn't have the power "to assess punitive fines or penalties."

Asked today during a conference with journalists what took so long, Treasury official Tim Massad essentially framed the decision to withhold subsidies as not such a big deal. It was merely "a next step" in Treasury's ongoing efforts to get banks to fairly evaluate homeowners' applications for modifications, he said. As we reported earlier this year, Treasury's oversight so far has mostly involved working with banks to get the problems fixed, and using carrots rather than sticks.

Massad also said Treasury hadn't taken this step earlier because it only has the power to withhold incentive payments that are slated for completed modifications. Withholding incentives wouldn't have made sense back in 2009, he argued, since so few modifications had been completed then. Treasury was making few payments at all to the banks.