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Posts Tagged ‘home loan help’

An official that administers the ‘Troubled Asset Relief Program’ recently wrote to twenty banks including Citigroup Inc. and Bank of America Corp requesting details of their purchases of mortgage-backed and asset-backed securities.

The reason for the letters is that the U.S. Treasury is under pressure to revive lending but wants greater clarification of what was done with the monies that were already doled out to the banks in question.

In particular, the Treasury wants specific information on first time mortgages, home equity and credit card loans as well as a summary of other types of consumer lending and the requested data also includes commercial real estate lending and consumer and industrial loans.

As was anticipated, Treasury Secretary Henry Paulson’s is already becoming a scapegoat and aides close to Obama are already accusing him of lack of transparency and of not having done enough to get additional credit flowing through the system.

Obama advisers are already calling for more accountability from banks that received taxpayer money and David Axelrod who is Obama’s chief political adviser has already stated that the new team will manage the TARP (Troubled Asset Relief Program) in a “much different way” and amongst alternatives under consideration are the setting up of a government-backed bad or aggregator bank to hold the securities, or leaving the assets on banks’ books and providing a government guarantee.

Lawrence Summers, who is the director-designate of the ‘National Economic Council’ had this to say when interviewed on CBS’s ‘Face the Nation’, “Anyone who looks at it has got to be disappointed when they look at what’s happened to lending, has got to think the results have been unsatisfactory”.

However Kashkari is on record as saying that, “As long as confidence remains low, banks will remain cautious about extending credit, and consumers and businesses will remain cautious about taking on new loans but as confidence returns the Treasury expects to see more credit extended”.

The bottom light might be however that even though pressuring banks to increase lending runs the risk of encouraging more bad loans it would seem that borrowers might need to be encouraged too because if they don’t borrow then the banks will fail.