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Financial bailout must help homeowners too
AP
Issue date: 12/4/08 Section: News
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"The deteriorating assets in the financial markets are rooted in the deterioration of people being able to pay their mortgages and stay in their homes," he said.
Obama's stance represents a policy clash with Treasury Secretary Henry Paulson, who has resisted proposals to use the rescue fund to help guarantee reworked mortgages.
At a Chicago news conference to introduce New Mexico Gov. Bill Richardson as his commerce secretary nominee, Obama said helping people pay their mortgages has to be a component of the rescue fund.
"We've got to start helping homeowners, in a serious way, prevent foreclosures," he said.
On Monday, Paulson said the administration was seeking to halt the record-breaking number of foreclosures. But he did not drop his opposition to using the rescue fund for a program being pushed by Federal Deposit Insurance Corp. Chairman Sheila Bair. The FDIC plan would use the rescue fund to help back refinanced mortgages that would lower monthly payments.
Key congressional Democrats have also demanded that the financial rescue money be used to help homeowners.
Obama's comments came a day after the Government Accountability Office, in the first comprehensive review of the rescue package, concluded that the Treasury Department has no mechanisms to ensure that banking institutions limit their top executives' pay and comply with other restrictions.
"We're seeing some areas where we can be doing better in making sure that this money is not going to CEO compensation, that it's protecting tax payers and that the taxpayers are going to get their money back," Obama said.
The auditors acknowledged that the program, created Oct. 3 to help stabilize a rapidly faltering banking system, was less than 60 days old and has been adjusting to an evolving mission.
But auditors recommended that Treasury work with government bank regulators to determine whether the activities of financial institutions that receive the money are meeting restrictions on executive pay, dividend payments and repurchasing of shares.
"Treasury also has no policies and procedures in place for ensuring that the institutions are complying with these requirements or that they are using the capital investments in a manner that helps meet the purposes of the act," auditors said.
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