Sheila Bair Again Appeals for Immediate Measures to Halt Foreclosures

The chairperson of FDIC, Sheila Bair again appealed for immediate measures to halt foreclosures. She said that she still had hopes that the federal bailout funds would come of immediate help to the foreclosure victims. At a breakfast meet at the John Hopkins University Cary Business School she said, “The issue is whether it’s an appropriate use of (Treasury bailout) funds or not, we think it is. We think it’s a good investment and so we are meeting with both Congress and the Secretary of the Treasury on that still.”

Reacting to the reluctance of Henry Paulson to go along with the FDIC proposals Bair commented, “We have a great working relationship and I’m still talking with him. So, still hopeful.”

Bair also referred to the deep drop in Wall Street last Wednesday and suggested that at the market level also some long-term thinking is required. She added, “We need to get back to basics.” She was very concerned about what happened in the market on Wednesday and expressed her fears saying that the investors could be “transitioning from an irrational exuberance to irrational despair. There was a lot of overreaction in the market yesterday.”

Sheila Bair categorically and bluntly said that the government in handling the economic crisis was not addressing the foreclosure problem. She repeated this point again and again. Only by giving importance to the foreclosure problem will the real estate market get a chance to regain stability. She said, “If there’s one thing the government has to do it’s tackle these unnecessary foreclosures.” The rush of foreclosed bank repossessed houses into the market has caused prices to tumble. The top priority is to protect house values – the pillar of bank lending.

FDIC represented by Sheila Bair has broken with the Bush government over the using of $24 billion from the bailout money for helping foreclosure victims. Nancy Pelosi is pressing Paulson to give support to the FDIC plan. Ben Bernanke the chairperson of Federal Reserve speaking to lawmakers opined that in some instances the FDIC plan would be too costly but nevertheless he had to admit that the approach was “very promising.”

RealtyTrac calculates that before the year draws to a close, over a million properties will become repossessed by the banks and enter the real estate market. It will account for about one third of all the units up for sale in America.

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