US Set to Release Rescue Plan against Foreclosures

After newly-elected US President Barack Obama’s first news conference on Monday where he laid out the new government’s plan of action against the worsening economic recession, US Treasury Secretary Timothy Geithner is now posed to release a bank-rescue plan on Tuesday.

This program is expected to take off $500 billion worth of bad assets in major banks. Also included in this plan is to execute a Federal Reserve program that is aimed at providing assistance to consumers facing foreclosures. As of now, the housing industry is in a very critical situation, with the number of foreclosed homes continuously increasing. This poses a threat to the whole economy as a whole. As the values of foreclosed properties are very low, this pulls down the sale values of other items and properties.

This program is part of the original TARP program started by the Bush administration. However, there are some discrepancies and negative opinions regarding the program as well as the allocation of its funds. The funds were directed to inject capital into ailing banks and automakers.

At present, these funds are instead more focused on providing mortgage adjustments to homeowners who are facing foreclosure threats. Moreover, the Treasury Department is looking at providing assistance to lending banks. With this, Pres. Obama asks for transparency from banks, releasing statements about their current condition, so that the government will be able to give support when necessary.

Also included in this plan is the $50 billion worth of funds aimed at stemming foreclosures. More actions and programs to aid the housing industry are expected to be announced by Lawrence Summers, director of the White House National Economic Council.

According to Summers, the new administration is expecting the private sector to undertake drastic measures, since a big part of the economic recession originated from them. Private investors are being asked by the government to be more proactive in doing something about the current situation, such as buying more mortgage assets that are clogging up bank books.