Friday, October 24, 2008

FDIC: $40Bn More Down the Drain Beyond Fan/Fred

A little lobbying goes a long way.

In another attempt to artificially prop up the value of housing, the FDIC announces that it will assume 'some risk' of re-negotiated mortgages.

Federal Deposit Insurance Corp Chairman Sheila Bair told the Senate Banking Committee that regulators were working with the Bush administration to create a loan guarantee program under which the government would bear some of the risk of future losses.

"We're having very good discussions with Treasury," Bair said, suggesting loan guarantees would be an incentive for lenders to modify loans and possibly slow defaults. "We're sharing some ideas, and I know they're looking at some other things as well."

Treasury's official appointed to run a financial bailout for financial firms, Neel Kashkari, said "it's something we're very seriously considering."

It's not too hard to figure out who's behind this scam.

Think Realtors and Local Gummints--both of which rely on housing values to make (or take) money.

The bailout package that Congress approved early this month gives the Treasury Department the power to offer loan guarantees as an inducement for lenders to modify loans, Bair said.

"Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards," Bair said. "By doing so, unaffordable loans could be converted into loans that are sustainable over the long term."

Bair did not mention any dollar figure for such a program but the Wall Street Journal reported on Thursday that officials were considering something on the order of $40 billion.

That's on top of the $200Bn absorbed by the taxpayers when they bailed out Fannie Mae and Freddie Mac.

You may have forgotten about that $200Bn, because the MSM only talks about "Bank" bailouts. But before "Bank" bailouts, there was the Fan/Fred bailout.

No comments: