Barney Frank wants TARP money for foreclosures

Posted Jan 10th 2009 1:40PM by Douglas McIntyre
Filed under: Housing, Recession

The subject just won't go away. Some lawmakers want TARP money to go toward stopping foreclosures. That is not exactly what the fund was supposed to be used for, but, by the same token, it was not meant to buy equity in banks. Paulson decided to do so anyway, which opened the door for using the TARP capital for whatever the Congress or Treasury want it to be used for.

According to The Wall Street Journal, "The federal government should devote at least $50 billion of the remaining financial-rescue funds toward a plan to prevent foreclosures, said House Financial Services Committee Chairman Barney Frank Friday."

That may be a noble idea, but it is not practical. The trouble with using government money to directly aid homeowners is that it would be remarkably complex and inefficient. Which homeowners qualify? How do they get their money, or a cut in their obligations? Is the program supervised by some federal agency or by banks? Who is considered needy and who is not?

Bailing out homeowners one at a time a a proposal that makes good headlines. It may help some members of Congress look like champions of the common man. But, the only realistic way to get relief for people having trouble paying their mortgages is to cut taxes or increase national employment. A person without a job, or a person worried about his job is not likely to view paying his mortgage any differently just because the government cuts his monthly payment from $800 to $600. It is still money he does not have.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Tags: Barney Frank, Paulson, TARP

Print this

Reader Comments (Page 1 of 1)

1-10-2009 @ 3:56PM

Dave said...

Barney Frank should be in jail for at least
20 years since he is the main factor in the housing sub prime mess which started
our down fall. He was told many times
but he protected his "lover" boy at the
fannie mae common knowledge in dc

1-10-2009 @ 6:05PM

william lindblad said...

Wadda you know - Dave, I like you.
I have been on a similar line since Nov. 07.
If anything, Barney is one arrogant SOB. I even tried communicating with this guy only to find out that he only takes commentary from HIS district. As HE is head of the House finance committee, I find him, and the rest of it's members responsible for the monumental mess that we are in. Yeah, he HAD to be in someones pocket! The rest of the committee I am not sure of as - at least a few understand finance so poorly that they just don't belong there!
In any case, we are where we are and it is a sure bet that Barney would like to divert attention. Political ploy - blame someone else! I agree with Doug. If you want stupid ideas - go to the hill for them.
My only hope is that if things get bad enough the public will start to pay attention and vote the bozos out. Until that happens?
One bright spot is that Obama seems to realize the scope of this dilema and appears headed in a positive direction. I do hope that figures out that he and the U.S., cannot do it alone. Trade, and the problem are world wide and it will take all of the major countries and their respective leaders to formulate a policy of counter measures.
The real estate market and greed are at the bottom of the mess and sub prime is only a small part. Even a moronic banker would not give a million dollar loan to someone making 8 bucks an hour. The media still have yet to come to grips with the fact that it was people with resources that are the major factor. Besides, it's not over yet. We still have all the excess commercial properties to fail - and they will.

1-10-2009 @ 9:19PM

Jessy Scholl said...

I agree with the first two comments above. For the most part, Barney Frank should fry for his part in causing the subprime meltdown and the coming collapse of Wal-Mart and Home Depot. Both built too many stores in places that are hurting badly. Especally Wal-Mart when they over expanded by building too many supercenters, and hurt their own problems by ending Layaway.

As for the foreclosure problem itself, I am pretty sure that Congress and/or the President has the power to forgive debt. That is what I would do if I were in their position.