Geithner Thanks TARP For Record-Low Interest Rates

by Miles Wolf Tamboli
Talk Radio News Service

Treasury Secretary Tim Geithner said Tuesday that due, in part, to the Troubled Asset Relief Program (TARP), credit costs have plummeted, creating new opportunities for homeowners and small businesses.

"The financial system is in a much stronger position, and because of that, the cost of credit for homeowners, for consumers, for businesses has fallen significantly," Geithner said. "Rates for mortgages and auto loans, for example, are at historic lows."

Congressional Oversight Committee Chair Elizabeth Warren pressured Geithner to provide a "metric" for TARP's success in protecting American citizens from the mortgage crisis.

"You set aside $50 billion, and what do you have to show for it? What is the metric for success here," she questioned. "Is it 120,000 families saved over fifteen months, at a time when 186,000 are posted for new defaults and foreclosures every month? Is that a successful program? How do we decide when the program is working?"

Despite reassurances from the Treasury Secretary, lawmakers were left wondering in what ways to measure the success of Tarp before the program's expected termination in October.

"This hearing should be a eulogy for TARP. We are working very hard to put this program to rest," Geithner said. "It's not going to solve all the problems facing the country, it wasn't designed to, but it's done the essential thing it was designed to do and, therefore, our expectation is that it will be allowed to expire."

The Treasury Secretary also used the hearing as an opportunity to show his support for financial reform, which he sees as a chance to shift focus from crisis response to crisis prevention.

"The House and the Senate are now very close to enacting the strongest set of reforms we've considered as a country since the Great Depression," said Geithner. "The reforms will end 'Too Big To Fail' [and] non-bank financial firms, such as AIG, will no longer be allowed to exploit regulatory cracks."

Geithner said that the best thing Congress can do to tackle the remaining credit problems facing America is to pass the set of credit programs that benefit small businesses.

Geithner: Mortgage Service Companies Failing The American People

By Chingyu Wang-Talk Radio News Service

Treasury Secretary Timothy Geithner accused mortgage service companies of not providing adequate assistance to Americans at-risk of losing their homes.

"We do not believe that servicers are doing enough to help the homeowners, they are not doing enough to help navigate the difficult and often frightening process foreclosure," said Geithner.

To counter the mortgage service companies’ shortcomings, Geithner touted a new program developed by the Obama administration entitled Home Affordable Modification Program (HAMP).

"HAMP has now offered trial modification to more than 1.4 million Americans, this represents roughly 3 quarters of Americans estimated to be eligible for this program today. About 1.2 million homeowners have begun trial modification and seen an immediate reduction in their monthly mortgage payment by an average just more than $500 per month,” Geithner said.

The secretary stressed that the program is not designed for those who those invest in real estate or are at risk for losing vacation homes.

Website helps youth say "NO" to debt

by Christina Lovato, University of New Mexico-Talk Radio News Service

A new health and financial site focused towards young adults from ages 18-34, gives resources and information that they won’t learn in school.

Anna Greenburg, the Senior Vice President of Greenberg Quinlan Rosner Research, said that younger people are suffering worse from the economic situation than older people except in regard to retirement and investment income because they don’t have any.

“Even though this recession is affecting everybody the way it affects young people has the potential impact to affect what their financial lives look like 20, 30 and 40 years from now.”

Greenburg also said that younger people are facing the highest unemployment rate out of every group.

“You got sort of a double whammy with younger people. Their both more likely to be unemployed, more likely to work part time and if you work part time, more likely to have your hours cut back and your wages cut.”

In the study “Young People: Trying to Weather a Recession” conducted by Greenburg Quinlan Rosner Research and Qvisory.org, 19% of young adults say they are unemployed or looking for work compared to only 7% of adults ages 30 and over.

The study also found that in 2008, 37% of young people reported having more than $5,000 in debt, excluding amounts from mortgages and student loans.

A new website called Qvisory.org, that was launched in October 2008, is hoping to provide resources and information for young adults that they are not learning in the classrooms.

Gina Glantz, the Qvisory Treasurer said that America’s younger generation is in jeopardy.

“They don’t feel well represented in the halls of power and they like most Americans have grown to distrust their financial institution.”

Glantz said that now more than ever young adults need guidance because they are suffering the most.

“They need trusted resources and a navigation system to help them secure their health and financial well being and have a chance at the American dream.”

Qvisory is a non-profit organization that has a $36 per year membership fee that includes services like the distribution of pre-paid cards, a COBRA (Consolidated Omnibus Budget Reconciliation Act) information center, a low-cost dental insurance program, a combination of employee assistance programs, and free telephone and online services.

“There is a no more important time for young people to find the resources and information they need to survive the situation they find themselves in,” concluded Glantz.

Congressional committee stresses the importance of reducing foreclosures

Rep. Barney Frank (D-Mass.), Chairman of the House Financial Services Committee, said he has seen “encouraging signs,” in efforts to reduce foreclosures in the U.S. During a Financial Services Committee hearing today, Frank said it would be very important to the economy to reduce foreclosures and to use the rescue plan to put money into the economy.

Chairman Frank stated that taxpayer dollars wouldn’t be used to help others “pay their mortgages,” believing there was “zero likelihood” that that would happen. Frank also felt that decisions on the housing crisis are “unmakeable” in government currently, adding, “Someone has got to have the authority to make a decision.”

Rep. Spencer Bachus (R-Ala.) said that while the U.S. should work to reduce foreclosures, “We need to be careful to prevent all foreclosures.” Bachus stated, "If a homeowner is under water, if the house is worth substantially less than the mortgage, it is predictable that many are going to walk away from their obligation. In fact, we are seeing a good percentage of foreclosures in which the homeowner is under water and they are walking away." He added, "I don’t see any practical way of preventing that."

While Bachus agreed that the government could not allow an economic collapse, he asked “Where does it stop?” Bachus did praise government’s intervention in the crisis to this point, saying “So far, we’ve made a terrible situation better,” but advocated the need for an "exit strategy."

Rep. Paul Kanjorsky (D-Pa.) made a reference to homeowners, saying that it was important to “keep them afloat.” He added that current foreclosure rates have “decimated some communities.”

According to Rep. Randy Neugebauer (R-Texas), it is important not to “encourage borrower behavior that is not appropriate.” He did think that if dialogue between borrowers and lenders is encouraged, “there will be some effort” to keep people in their homes.

Benjamin Allensworth, Senior Legal Counsel for the Managed Funds Association, said “the wave of foreclosures has placed downward pressure on home prices, which in turn has eroded home equity and consumer confidence in the mortgage market.” He advocated “effective mortgage modifications over foreclosure whenever possible.”

Thomas Deutsch, Deputy Executive Director of the American Securitization Forum, felt that government assistance in the crisis is vital and while mortgage lenders have made efforts to prevent “avoidable foreclosures,” “Macro economic forces bearing down on an already troubled housing market are simply too strong for private sector loan modification alone to counteract the nationwide increase in mortgage defaults and foreclosures.” Deutsch felt the housing crisis could not be resolved without government assistance.

Housing market took risks

Bush Economic Adviser Keith Hennessey said an "oversupply of houses" has contributed to the significant downturn in housing markets. He said that as long as there is an oversupply, a downturn will continue.

At a summit on housing, Hennessey said that mortgages have been "sliced and diced." Hennessey said these bad mortgages have contributed to "downside risk" in the economy, which has culminated recently in the bailout bill by Congress.

Federal Housing Administration (FHA) Commissioner Brian Montgomery said the FHA's goal for homeowners is "sustained ownership." He said the goal is not to give homes to those who financially cannot handle the costs. He called the subprime loan crisis "fool's gold" for its low initial costs followed by higher costs later.

Montgomery, who also is Assistant Secretary of Housing of the U.S. Department of Housing and Urban Development (HUD), said the goals of HUD are to "try and save the hundreds of thousands in foreclosure," and to maker sure the current housing crisis "never happens again."

HUD Director of Single Family Program Development Meg Burns talked about two programs recently enacted designed to help homeowners. She said both the "Housing and Economic Recovery Act of 2008" and the "Hope for Homeowners" rollout are designed to create fair payments for both borrowers and lenders. She said one difference between the two is that the Housing and Recovery Act is designed to help those "in a state of delinquency" due to job loss or medical problems, while Hope for Homeowners is for those "who should never have become homeowners in the first place."

Burns's advice to all homeowners who are having financial difficulties is to "call your lender."