Look, someone in the Bush administration is trying to do the right thing; but, turn out the lights because the party is over! W...Worst President Ever!
Released by Reuters on Fri Nov 14, 2008 3:15pm EST
By Karey Wutkowski and Patrick Rucker
WASHINGTON (Reuters) - A top U.S. banking regulator unveiled a plan on Friday to prevent about 1.5 million foreclosures, breaking ranks with the Bush administration by demanding bailout funds be diverted from banks to consumers.
The Federal Deposit Insurance Corp said the plan would modify millions of delinquent mortgages and the government would reward participating lenders by sharing the cost of defaults on restructured loans.
The dispute over housing policy during the administration's final weeks spilled into the public as a U.S. Treasury official and the White House on Friday renewed their opposition to using money from the $700 billion bailout fund to support such a program.
Treasury Interim Assistant Secretary Neel Kashkari told a U.S. House of Representatives committee the Troubled Assets Relief Program (TARP), which the Treasury controls, was designed for investing.
"The FDIC proposal at the end of the day is a spending proposal," he said.
Kashkari said Treasury Secretary Henry Paulson thinks the FDIC proposal "is a very interesting idea" and urged Congress to consider drafting legislation to create such a program.
The White House said it is carefully reviewing the FDIC plan, but that it has to think about its potential cost.
The FDIC said its plan would cost the government about $24.4 billion, which could be paid from the TARP. Most of the money from an initial disbursement in that program has been injected as capital into banks.
FDIC Chairman Sheila Bair, who spent weeks unsuccessfully lobbying Bush administration officials for the plan, issued the proposal two days after Paulson publicly dismissed the idea.
Leading Democratic lawmakers have rallied behind Bair, a Republican, and have even pushed for her to have a place in Democratic president-elect Barack Obama's administration.
Senate Banking Chairman Chris Dodd, a Connecticut Democrat, said on Wednesday that he hopes Paulson works with Bair to get the program up and running as soon as possible to address the worst housing crash since the Great Depression.
The FDIC pushed forward with its plan, posting it on the agency's Web site on Friday morning (http://www.fdic.gov/consumers/loans/loanmod/index.html).
"Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow," the FDIC said. "It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures."
The FDIC, which insures most U.S. bank deposits, said it plans to overcome the problem of reaching borrowers, which has dogged previous efforts, by offering mortgage servicers $1,000 to cover expenses for each loan modified. It said the plan could modify about 2.2 million mortgage loans and promised to share up to 50 percent of losses incurred if a borrower defaults on a loan that has been restructured.
Eligible borrowers would include those who have missed at least two monthly payments on loans for homes they live in. Lenders would be expected to lower those borrowers' monthly payments to about 31 percent of the borrowers' monthly income.
The plan is modeled on the FDIC's program to modify distressed mortgages at failed lender IndyMac Bancorp Inc, which the agency seized in July.
COMPETING PLANS
Kashkari said on Friday that it was "aggressively" looking at ways to use TARP to reduce skyrocketing home foreclosures.
The federal government has laid out a number of plans in recent months to try to help distressed homeowners, the latest of which came earlier this week. On Monday, the federal overseer of mortgage giants Fannie Mae and Freddie Mac said the companies' struggling borrowers can apply to have their mortgage payments lowered to 38 percent of their income.
An FDIC official, however, said on Friday that plan and others have not gone far enough, and that $24 billion in federal money should be dedicated to having a stronger effect on foreclosures.
"I think more needs to be done now," said Mike Krimminger, special policy adviser to the FDIC, to CNBC. "That's a substantial amount of money, but I think trying to get an impact on the overall market justifies the spending of that money. I think investing in the housing market, investing in the stability for our communities, and stability for our mortgages is crucial if we're going to avoid the greater economic impact."
Consumer advocates cheered Bair's proposal.
"It is clear that existing loan modification efforts have not worked," said John Taylor, president of the National Community Reinvestment Coalition, in a statement. "The administration needs to get behind a meaningful proposal to address home foreclosures."
Linda Lowell, a mortgage market veteran and founder of consulting firm OffStreet Research, said Bair has been talking about stabilizing borrowers for more than a year and clearly intends to get her plan through.
"She more than a lot of people has gotten it sooner, that if they don't find a way that is reasonable and productive to stop the foreclosures, they continue to build the pressure on home prices" and the overall economy, Lowell said.
(Reporting by Karey Wutkowski and Patrick Rucker, additional reporting by Al Yoon in New York, Editing by Tom Hals)
Link to Article: http://www.reuters.com/article/newsOne/idUSTRE4AD5AU20081114?sp=true
© Thomson Reuters 2008 All rights reserved
Released by Reuters on Fri Nov 14, 2008 3:15pm EST
By Karey Wutkowski and Patrick Rucker
WASHINGTON (Reuters) - A top U.S. banking regulator unveiled a plan on Friday to prevent about 1.5 million foreclosures, breaking ranks with the Bush administration by demanding bailout funds be diverted from banks to consumers.
The Federal Deposit Insurance Corp said the plan would modify millions of delinquent mortgages and the government would reward participating lenders by sharing the cost of defaults on restructured loans.
The dispute over housing policy during the administration's final weeks spilled into the public as a U.S. Treasury official and the White House on Friday renewed their opposition to using money from the $700 billion bailout fund to support such a program.
Treasury Interim Assistant Secretary Neel Kashkari told a U.S. House of Representatives committee the Troubled Assets Relief Program (TARP), which the Treasury controls, was designed for investing.
"The FDIC proposal at the end of the day is a spending proposal," he said.
Kashkari said Treasury Secretary Henry Paulson thinks the FDIC proposal "is a very interesting idea" and urged Congress to consider drafting legislation to create such a program.
The White House said it is carefully reviewing the FDIC plan, but that it has to think about its potential cost.
The FDIC said its plan would cost the government about $24.4 billion, which could be paid from the TARP. Most of the money from an initial disbursement in that program has been injected as capital into banks.
FDIC Chairman Sheila Bair, who spent weeks unsuccessfully lobbying Bush administration officials for the plan, issued the proposal two days after Paulson publicly dismissed the idea.
Leading Democratic lawmakers have rallied behind Bair, a Republican, and have even pushed for her to have a place in Democratic president-elect Barack Obama's administration.
Senate Banking Chairman Chris Dodd, a Connecticut Democrat, said on Wednesday that he hopes Paulson works with Bair to get the program up and running as soon as possible to address the worst housing crash since the Great Depression.
The FDIC pushed forward with its plan, posting it on the agency's Web site on Friday morning (http://www.fdic.gov/consumers/loans/loanmod/index.html).
"Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow," the FDIC said. "It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures."
The FDIC, which insures most U.S. bank deposits, said it plans to overcome the problem of reaching borrowers, which has dogged previous efforts, by offering mortgage servicers $1,000 to cover expenses for each loan modified. It said the plan could modify about 2.2 million mortgage loans and promised to share up to 50 percent of losses incurred if a borrower defaults on a loan that has been restructured.
Eligible borrowers would include those who have missed at least two monthly payments on loans for homes they live in. Lenders would be expected to lower those borrowers' monthly payments to about 31 percent of the borrowers' monthly income.
The plan is modeled on the FDIC's program to modify distressed mortgages at failed lender IndyMac Bancorp Inc, which the agency seized in July.
COMPETING PLANS
Kashkari said on Friday that it was "aggressively" looking at ways to use TARP to reduce skyrocketing home foreclosures.
The federal government has laid out a number of plans in recent months to try to help distressed homeowners, the latest of which came earlier this week. On Monday, the federal overseer of mortgage giants Fannie Mae and Freddie Mac said the companies' struggling borrowers can apply to have their mortgage payments lowered to 38 percent of their income.
An FDIC official, however, said on Friday that plan and others have not gone far enough, and that $24 billion in federal money should be dedicated to having a stronger effect on foreclosures.
"I think more needs to be done now," said Mike Krimminger, special policy adviser to the FDIC, to CNBC. "That's a substantial amount of money, but I think trying to get an impact on the overall market justifies the spending of that money. I think investing in the housing market, investing in the stability for our communities, and stability for our mortgages is crucial if we're going to avoid the greater economic impact."
Consumer advocates cheered Bair's proposal.
"It is clear that existing loan modification efforts have not worked," said John Taylor, president of the National Community Reinvestment Coalition, in a statement. "The administration needs to get behind a meaningful proposal to address home foreclosures."
Linda Lowell, a mortgage market veteran and founder of consulting firm OffStreet Research, said Bair has been talking about stabilizing borrowers for more than a year and clearly intends to get her plan through.
"She more than a lot of people has gotten it sooner, that if they don't find a way that is reasonable and productive to stop the foreclosures, they continue to build the pressure on home prices" and the overall economy, Lowell said.
(Reporting by Karey Wutkowski and Patrick Rucker, additional reporting by Al Yoon in New York, Editing by Tom Hals)
Link to Article: http://www.reuters.com/article/newsOne/idUSTRE4AD5AU20081114?sp=true
© Thomson Reuters 2008 All rights reserved
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