diff --git a/xos/synchronizers/new_base/backend.py b/xos/synchronizers/new_base/backend.py
index 72de08f..eccd570 100644
--- a/xos/synchronizers/new_base/backend.py
+++ b/xos/synchronizers/new_base/backend.py
@@ -23,13 +23,8 @@
     def __init__(self):
         pass
 
-    def load_sync_step_modules(self, step_dir=None):
+    def load_sync_step_modules(self, step_dir):
         sync_steps = []
-        if step_dir is None:
-            try:
-                step_dir = Config().observer_steps_dir
-            except:
-                step_dir = '/opt/xos/synchronizers/openstack/steps'
 
         logger.info("Loading sync steps from %s" % step_dir)
 
@@ -55,23 +50,28 @@
         return sync_steps
 
     def run(self):
+        observer_thread = None
         watcher_thread = None
         model_policy_thread = None
 
         model_accessor.update_diag(sync_start=time.time(), backend_status="0 - Synchronizer Start")
 
-        sync_steps = self.load_sync_step_modules()
+        steps_dir = Config().observer_steps_dir
+        if steps_dir:
+            sync_steps = self.load_sync_step_modules(steps_dir)
+            if sync_steps:
+                # start the observer
+                observer = XOSObserver(sync_steps)
+                observer_thread = threading.Thread(target=observer.run,name='synchronizer')
+                observer_thread.start()
 
-        # start the observer
-        observer = XOSObserver(sync_steps)
-        observer_thread = threading.Thread(target=observer.run,name='synchronizer')
-        observer_thread.start()
-
-        # start the watcher thread
-        if (watchers_enabled):
-            watcher = XOSWatcher(sync_steps)
-            watcher_thread = threading.Thread(target=watcher.run,name='watcher')
-            watcher_thread.start()
+                # start the watcher thread
+                if (watchers_enabled):
+                    watcher = XOSWatcher(sync_steps)
+                    watcher_thread = threading.Thread(target=watcher.run,name='watcher')
+                    watcher_thread.start()
+        else:
+            logger.info("Skipping observer and watcher threads due to no steps dir.")
 
         # start model policies thread
         policies_dir = getattr(Config(), "observer_model_policies_dir", None)
@@ -80,7 +80,6 @@
             model_policy_thread = threading.Thread(target=policy_engine.run, name="policy_engine")
             model_policy_thread.start()
         else:
-            model_policy_thread = None
             logger.info("Skipping model policies thread due to no model_policies dir.")
 
         while True:
@@ -89,7 +88,8 @@
             except KeyboardInterrupt:
                 print "exiting due to keyboard interrupt"
                 # TODO: See about setting the threads as daemons
-                observer_thread._Thread__stop()
+                if observer_thread:
+                    observer_thread._Thread__stop()
                 if watcher_thread:
                     watcher_thread._Thread__stop()
                 if model_policy_thread:
diff --git a/xos/synchronizers/new_base/model_policy_loop.py b/xos/synchronizers/new_base/model_policy_loop.py
index fe15f09..0c55cb1 100644
--- a/xos/synchronizers/new_base/model_policy_loop.py
+++ b/xos/synchronizers/new_base/model_policy_loop.py
@@ -93,6 +93,7 @@
         #elif (sender_name in delete_policy_models):
         #    walk_inv_deps(self.delete_if_inactive, instance)
 
+        policies_failed = False
         for policy in self.policies_by_name.get(sender_name, None):
             method_name= "handle_%s" % action
             if hasattr(policy, method_name):
@@ -102,12 +103,14 @@
                     logger.debug("MODEL POLICY: completed handler %s %s %s %s" % (sender_name, instance, policy.__name__, method_name))
                 except:
                     logger.log_exc("MODEL POLICY: Exception when running handler")
+                    policies_failed = True
 
-        try:
-            instance.policed=model_accessor.now()
-            instance.save(update_fields=['policed'])
-        except:
-            logger.log_exc('MODEL POLICY: Object %r failed to update policed timestamp' % instance)
+        if not policies_failed:
+            try:
+                instance.policed=model_accessor.now()
+                instance.save(update_fields=['policed'])
+            except:
+                logger.log_exc('MODEL POLICY: Object %r failed to update policed timestamp' % instance)
 
     def noop(self, o,p):
             pass