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November 12, 2008
Banks lining up for gifts, Treasury pulling back on homeowner promises
As Alan White points out over at the Consumer Law and Policy blog, yesterday's announcement of modest mortgage help from Fannie and Freddie won't help many people stay out of foreclosure at all. Worse, as the New York Times story White House Scales Back a Mortgage Relief Plan by Edmund Andrews describes, the tiny plan is nothing like the one that FDIC Chair Sheila Bair believes is needed and is prepared to roll out. Unfortunately, the bankers over at Treasury seem to want to help other bankers, not homeowners. Shortly after Fannie Mae and Freddie Mac announced their new plan, Ms. Bair declared that it was inadequate and pointedly said that the government had spent hundreds of billions of dollars to bail out financial institutions like American International Group, the giant insurer. The plan “falls short of what is needed to achieve wide-scale modifications of distressed mortgages,” Ms. Bair said... Meanwhile, it is being widely reported (NY Times Lobbyists Swarm the Treasury for a Helping of the Bailout Pie) that banks are hiring lobbyists to help them get their well-deserved (they think so, anyway) share of taxpayer loot before it is all poured down what's been called the bottomless AIG "money pit." Meanwhile yesterday, in other news, the credit card giant American Express converted to a bank holding company and filed an immediate request for $3.5 billion in taxpayer largesse. While Treasury and the Fed (release) leave Bair and her staff waiting in their marble lobbies for long-promised help for homeowners, they found the time to waive all rules and waiting periods to get AmEx, a credit card company, not really much of a home lender, to the front of the line for cash. The analysts at the NY Times column breakingviews.com call this A Deal Taxpayers May Live to Regret. Meanwhile, all that money that the taxpayers have given to the banks already? They're not lending it. As yesterday's Washington Post reports: U.S. to Push Banks to Step Up Lending. So, if you're keeping score, no one's helping homeowners, AIG is a money pit, and all the bank kids on the block want some of the taxpayer money being given out and expect it with no strings attached-- they don't want to be told what to do with it. They want the right to hoard it for future acquisitions, to pay dividends to shareholders and pay bonuses to their failed executives. Congress and the public need to start raising more concerns about this mess.
Posted by Ed Mierzwinski at November 12, 2008 05:32 AM
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