Yes to Foreclosure Relief, Says FDIC Chair

FDIC Chair Sheila Bair’s hopes are still high for the use of Treasury bailout funds to aid homeowners at risk of foreclosures.

During her speech at Johns Hopkins University Carey Business School, Bair mentioned that the issue they are being faced with in their plans is whether the use of the funds to curb foreclosures would be an appropriate move or not. Bair is highly affirmative of the use of funds saying it would be a very smart investment, a point she is trying to present, and hopefully convince the Congress and even the Secretary of Treasury.

Another posting challenge for them is Treasury Secretary Henry Paulson, who has resisted the said proposal. However, Bair claimed they are currently talking to Paulson about it. She said she is hopeful especially since they have a healthy working relationship.

The declining home values due to unnecessary foreclosures has already had a significant dragging effect on the economy, a situation Bair’s agency has been trying to avoid.

Bair is confident the stability of the home prices which in effect can counter the already starting overreaction of prices in the housing market maybe counteracted by foreclosure relief. She says the government should start paying attention to this measure to be able to deal with economic crisis especially since a great deal of the crisis is brought about by unnecessary foreclosures.

As early as the Bush Administration, FDIC chair has already stepped up advocating the use of $24 billion of funds from the bailout to aid the struggling Americans who are highly at risk of losing their home to foreclosures.

Early this week, Federal Reserve Chairman Ben Bernanke admitted the FDIC plan may be costly but in the long run, could be a promising approach. However, Paulson, who has been resistant to the use of funds in providing mortgage to guarantees, stated that the administration will find ways to grant relief from foreclosures.