Bernanke Urges Action to Avert Further Foreclosures

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Bernanke Urges Action to Avert Further Foreclosures

Federal Reserve Chairman Ben S.
Bernanke
, seeking to end the worst housing slump in 25 years,
urged the government and mortgage lenders to intensify their
efforts to avoid home foreclosures.    
      

Bernanke, in a speech in New York today, also reiterated his
call for lenders to forgive portions of mortgages for some
struggling homeowners. He said proposals should be “tightly
targeted” at borrowers at greatest risk of losing their
properties, and avoid providing an incentive for defaults.    

The Fed chief also backed the idea of having the Federal
Housing Administration refinance troubled mortgages, a concept
included in Democratic legislation in Congress, without
explicitly endorsing the bill. His remarks indicate a gap with
the Bush administration, which has preferred to rely on industry-
led efforts.    

"Realistic public- and private-sector policies must take
into account the fact that traditional foreclosure-avoidance
strategies may not always work well in the current environment,”
Bernanke said in remarks to a Columbia Business School dinner.    

Source:
Bernanke Urges Action to Avert Further Foreclosures
Scott Lanman and Alison Vekshin
Bloomberg, May 5  2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8EpYTgVyvcQ

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What's been said:

Discussions found on the web:
  1. Gegner commented on May 8

    This rather transparent effort to ‘prop up’ CDO’s in the Fed’s possession will end in disaster for the US taxpayer.

    Some estimates place the number of eligible participants for this program at 500,000, a fraction of the number of foreclosures currently in process…not to mention the the huge number of mortgagee’s facing resets this year and next…

    Add to this rapid (speculator driven) inflation in fuel and food prices and you have the ingredients for a full scale revolt on your hands!

    There is no way out…

  2. cielo commented on May 8

    Is it just me, or does bloomberg feed only work in IE. My firefox browser always asks for WMP – which I have, but only runs video in IE.
    I think Bernanke looks like a large teddy bear.

  3. Ken H. commented on May 8

    AS usual, even if this had a chance of being any good,..it would never get to the people who needed it. Greedy investors would figure out how to fleece America some more.

    Ben misses the fact that homes became an investment pyramid scheme. It was a HUGE part of GDP that will never be replaced in the near term. No ATM, falling wages, energy/food inflation, and municipal tax base disapearing. That proposal will be felt like a fart in a hurricane.

    Are we sure Al and Ben are not in Al Qaeda?

  4. MJ commented on May 8

    Here is Bernanke’s full speech.

    http://www.federalreserve.gov/newsevents/speech/Bernanke20080505a.htm

    His conclusion:
    “Most Americans are paying their mortgages on time and are not at risk of foreclosure. But high rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy. Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It’s in everybody’s interest.”

    Everybody’s interest? Except those who chose to rent.

  5. Mr. Beach commented on May 8

    Ben is a tool. He watched naively as property prices bubbled up through insanely loose lending standards, as these ticking-time bomb mortgages became embedded in the assets of financial institutions, as hundreds of billions of capital was borrowed and consumed.

    And now he wants to protect the system?

    Where do we even start with this guy?

  6. Kinchip commented on May 8

    It seems to me that the grease we need to get the housing market settled faster would flow from a change wherein banks paid the same costs to buyback their auctioned homes as any other buyers. Does that exist anywhere and if so, what is the effect?

  7. Johnnyvee commented on May 8

    I think Ben is becoming unnerved a little bit. Maybe he knows that the next wave of foreclosures is twice as big as the first. And, if its allowed to occur without being “cushioned” or delayed, the impact huge.

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