FDIC's Bair Suggests Guarantees for Loans
A new plan to coax mortgage servicers to modify loans by offering them federal loan guarantees and credit enhancements is in the works, Federal Deposit Insurance Corp. Chairman Sheila Bair told a U.S. Senate panel Thursday.
Ms. Bair said the FDIC is working 'closely and creatively' with the Treasury on the plan, saying the recently-passed financial rescue legislation gave the Treasury the authority to offer such incentives to servicers helping borrowers to avoid foreclosure.
Mortgage servicers -- companies that collect payments and work with homeowners -- typically act on behalf of those investors, who often have competing interests.
'Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards,' she said. 'By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.'
Ms. Bair said she was engaged in 'very good discussions' on the plan with Treasury Secretary Henry Paulson, who she said was 'as concerned as much as anybody' about rising foreclosures.
U.S. Treasury Interim Secretary for Financial Stability Neel Kashkari, who also testified before the panel, confirmed that Treasury was working on new policies to prevent foreclosures. He said Treasury was 'passionate about doing every we can to avoid preventable foreclosures,' but added that the administration didn't want new efforts to interfere with existing programs, such as the recently launched Hope for Homeowners program.
'We share your sense of urgency,' Mr. Kashkari told Senate Banking Chairman Christopher Dodd.
After the hearing, Sen. Dodd told reporters that the FDIC seems ready and able to implement the program, noting that Ms. Bair herself said that the FDIC already has sufficient resources. 'This is the expertise of the FDIC. This is what they do,' said Sen. Dodd.
Sen. Dodd urged the Treasury to use its authority to spur servicers to modify loans with loan guarantees and credit enhancements. 'This slender provision alone can help countless deserving Americans escape the foreclosure trap set by predatory lenders,' Sen. Dodd said in prepared remarks.
Ms. Bair said the incentives could make servicers' decision to modify a loan 'more powerful.' She said such a plan could also create a way for foreclosure prevention to be conducted on an industry-wide basis rather than by the current ad-hoc process. Ms. Bair said the FDIC has the resources to implement the plan, although it would be overseen chiefly by Treasury.
There are signs that Ms. Bair, an early and loud advocate of more ambitious action to stop foreclosures, is gaining traction with fellow federal officials.
She detailed the steps the FDIC has taken to modify systematically a pool of mortgages it acquired from failed thrift IndyMac Bancorp earlier this year. Though the program was still in its early stages, more than 3,500 borrowers have agreed to modification proposals from the FDIC, Bair said. On average, the modifications have cut monthly payments by more than $350.
'While it is clearly too early to declare the end of the crisis in our financial markets, as a result of the coordinated response of the Fed, the Treasury, the FDIC and our counterparts overseas, we are making steady progress in returning money and credit markets to a more normal state,' she said.
JOHN D. MCKINNON / JESSICA HOLZER
国联邦存款保险公司(Federal Deposit Insurance Corp.，简称FDIC)董事长希拉·拜尔( Sheila Bair)周四向美国参议院一个评审小组说，FDIC与政府正在制订一项计划，向按揭贷款服务商提供联邦贷款担保并加强信贷，以鼓励它们修改贷款条件。
美国财政部临时负责金融稳定计划的Neel Kashkari也向参议院评审小组作证，他证实财政部正在研究防止止赎的新政策。他说，财政部热切希望尽我们所能，避免可以避免的止赎，但又表示财政部不希望新的举措妨碍现有的计划，比如最近公布的“业主希望计划”(Hope for Homeowners)。
Kashkari对参议院银行委员会(Senate Banking Committee)主席克里斯多夫·多德(Christopher Dodd)说，我们跟你一样有紧迫感。
JOHN D. MCKINNON / JESSICA HOLZER
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