Obama Wants Part of Bailout Package to Stem Foreclosure Tide
Obama wants part of the bailout package to be utilized for stemming the foreclosure tide. In this respect he is not at one with the views of Henry Paulson on the way the $700 billion is to be used. On Wednesday 3rd December 2008 he gave out clear signals that he wanted to use a good amount of that fund to put a brake on foreclosures by assisting the foreclosure victims struggling with their mortgages. He said, “The deteriorating assets in the financial market are rooted in the deterioration of people being able to pay their mortgages and stay in their homes.”
The stand taken by Obama shows a clash of opinion as regards policy matters with the Treasury Secretary, Henry Paulson. Paulson has opposed plans to use the bailout money to provide guarantee to modified loan mortgages.
Paulson also crossed swords with the House Republicans who gave out a stern warning to both Paulson and the chairperson of Federal Reserve Ben Bernanke, that unless they are more accountable, Congress will not release the second installment of the $700 billion package.
The leader of the minority John Boehner (12 house Republicans) writing to Paulson and Bernanke said, “The government has burned through nearly $350 billion of (bailout) funds and is pledging trillions of dollars more through other programs, yet little is understood about how these investments are contributing to the nation’s economic recovery.”
Last Monday Paulson had said that the Bush administration was trying to stem the tide of an unforeseen number of foreclosures rushing in. But he did not distance himself from his previous stand of opposing a measure that was being pushed through by Federal Deposit Insurance Corporation under the Sheila Bair the chairperson. Bair wants to use part of the funds to allow for refinancing of mortgages by lowering the monthly installments.
Important Democrats in the Congress are also crying for the bailout fund to be largely used to assist the foreclosure victims. Since 3rd October the Troubled Relief Program or TARP has been enforced. The Government Accountability Office came to the conclusion that the Treasury does not have the infrastructure to see that the pay packages of their top executives and other perks are limited. Immediately after this statement Obama made his comments and the House Republicans submitted their letter. Foreclosures continue to haunt millions as the tug of war goes on.
