FDIC Breaks With Bush Administration on Foreclosure Policy
In a highly unusual move, the chairman of the Federal Deposit Insurance Corporation has gone public with a proposed mortgage foreclosure rescue plan that conflicts with the position taken by the U.S. Treasury Department and the White House.
The president and the treasury department say a $700 billion financial rescue plan previously approved by Congress should be used to provide cash to struggling financial institutions. But FDIC Chairman Sheila Bair essentially is lobbying Congress to approve a competing plan to help struggling homeowners obtain modified mortgages they can afford to pay by providing incentives to lenders to change the mortgage terms, reports Reuters.
“I have never seen anything like this,” says former FDIC general counsel John Douglas, now a partner at Paul Hastings Janofsky & Walker. “This is extremely unusual for an agency to get out in front of the administration like this.”
Additional coverage:
Wall Street Journal: “Lawmakers Grill Kashkari on Changes in TARP Plan”
Updated at 6:10 p.m. to include link to Wall Street Journal coverage.
