Federal Government’s Stability Spending Tops $4 Trillion

The total value of all direct spending, loans and guarantees provided to date in conjunction with the federal government’s financial stability efforts now exceeds $4 trillion, according to the Troubled Asset Relief Program’s Congressional Oversight Panel. “Six months into the existence of TARP, evidence of success or failure is mixed,” according to a report by the panel released yesterday. “It is possible that Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth.”

New Administration Pledges to Use TARP Funds for Foreclosure Relief

President-elect Barack Obama was continuing to lobby lawmakers today to release the remaining $350 billion in Troubled Asset Relief Program funds, pledging to use part of the money to provide relief to mortgage borrowers facing foreclosure. But what form a so-called “borrower bailout” might take remained unclear. Fed Chairman Ben Bernanke yesterday also promised that some of any new TARP money would go to foreclosure relief and pointed to the FDIC’s loan modification initiative as one possible administration-blessed approach.
Separately, House Financial Services Committee Chairman Barney Frank, D-MA, has introduced new TARP-related legislation that calls for an overhaul of the FHA’s slow-moving HOPE for Homeowners program as well as a new program guaranteeing loans made under the FDIC’s loan mod approach. Both H4H and the FDIC’s loan mod program will be reviewed in detail at an Inside Mortgage Finance audio conference tomorrow, Jan. 15, at 3:30 pm EST.

Lawmakers Push for Federal Foreclosure Relief Initiative

Lawmakers on the House Financial Services Committee yesterday grilled Treasury Secretary Hank Paulson on why the government had not used some of the $700 billion in TARP funds for a foreclosure relief initiative. Paulson pledged to work on funding some sort of foreclosure relief effort but was fuzzy on the timetable or the form a mortgage bailout plan might take.

Lawmakers as well as some regulators have voiced strong support for the aggressive loan modification proposal advanced by the FDIC and its chairman, Sheila Bair. The price tag for the FDIC plan, which involves government insurance for modified mortgages, has dropped to $25 billion- a level that looks like a relative bargain in Washington, DC these days.

Inside Mortgage Finance is hosted an audio conference on TARP and the various foreclosure relief programs under consideration on November 20.

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