Oversight Panel: Bailout Flawed; Mortgage Help Failing

U.S. TreasuryIn a mostly critical report on the Treasury’s bailout efforts, a Congressionally-appointed oversight panel today called government efforts to steer howeowners away from foreclosure as inadequate. The panel also said tight credit conditions prevail as banks withold capital against future losses.
The Congressional Oversight Panel focused its December report on whether the U.S. Treasury has properly discharged its mandate under the Emergency Economic Stabilization Act of 2008 (EESA) – the enabling legislation for the Troubled Asset Relief Program (TARP). TARP is the Treasury’s umbrella bailout program.
“TARP was an important part of a broader government strategy that stabilized the U.S. financial system,” the report said. “It is apparent after 14 months, however, that significant underlying weaknesses in the financial system remain.”
Available credit, particularly to struggling small businesses, persists, the report said.
“Banks might be holding more capital in order to offset potential future losses on loans,” the oversight report said. “The increases in delinquencies and charge-offs … support banks’ potential desire to hold cash to offset future losses on loans.”
Treasury Secretary Timother Geithner today said in a letter to Congressional leaders that TARP will be extended until October 2010, and its targeted assistance refocused to help more homeowners avoid foreclosures and help struggling small businesses secure credit.
The oversight report reflects the testimony of mortgage industry experts yesterday before a House panel. They agreed that the Obama Administration’s mortgage modification campaign, under it’s Home Affordable Modification Program, has failed to address the rampant problem of negative equity – when homes are valued less than the sum of the outstanding mortgages against the properties.
“Since the publication of the Panel’s October report, which analyzed Treasury’s foreclosure prevention efforts, new data has underscored the Panel’s concern that Treasury’s mortgage modification program is inadequate to address the foreclosure problem as it has evolved over the last 10 months,” the report said.
In October, the panel warned that TARP mortgage modifications were not keeping pace with foreclosures.
“HAMP has led to a total of 10,187 permanent modifications as of the end of October 2009, a fraction of the 89,810 completed foreclosure sales in September alone,”  the oversight report said.
See related articles:

Leave a Reply

Your email address will not be published. Required fields are marked *