Ya gotta shake your head when just like that Hank Paulson and the Bush administration hand over $250 billion to selected banks yet try to fight any of the bail out money going to homeowners.
Yet, here it is
FDIC publishes $24 billion plan to avert 1.5 million foreclosures by end of 2009
Testifying on Capitol Hill Friday, Neel Kashkari, the Treasury Department's assistant secretary for financial stability, said the aim of the $700 billion plan was to make investments with the hope of getting the money back. That he said, was "fundamentally different from just having a government spending program" that would disburse money with no chance of ever seeing any returns.
Government spending program? No returns? Seems like financing executive pay packages for do nothings who already ran their companies into the ground is the real spending program with no returns.
FDIC plan details:
The agency's plan, posted on its Web site Friday, would guarantee 2.2 million modified loans -- mainly risky loans made to borrowers with weak credit or small down payments -- through the end of next year. Borrowers would get reduced interest rates or longer loan terms to make their payments more affordable.
"If we can avoid those foreclosures, then you will get more stability in the housing market," said Michael Krimminger, a senior adviser to FDIC Chairman Sheila Bair, in an interview Thursday.
The FDIC says the government's backing will make the lending industry more willing to modify loans because taxpayers will absorb half of the losses if the borrower defaults again. Also, loan servicing companies, which collect and distribute mortgage payments, would be paid $1,000 for each loan they modify.
There are estimated to be 4.4 million homes in foreclose or delinquent next year. So trying to stem just half of this coming tsunami sure doesn't appear to be a giveaway for bad borrowers and bad debt to me.