Geithner Overhauling Bailout To Aid Cities, Homeowners, Small Businesses

Confronted with intense skepticism on Capitol Hill over the $700 billion financial rescue program, Treasury Secretary nominee Timothy F. Geithner and President-elect Barack Obama's economic team are urgently overhauling the embattled initiative and broadening its scope well beyond Wall Street, sources familiar with the discussions said.

Geithner has been working night and day on the eighth floor of the transition team office in downtown Washington with Lawrence H. Summers and other senior economic advisers to hash out a new approach that would expand the program's aid to municipalities, small businesses, homeowners and other consumers. With lawmakers stewing over how Bush administration officials spent the first $350 billion, Geithner has little chance of winning congressional approval for the second half without retooling the program, the sources added.

Read the whole story here.

Comments

[PhilipTaylor]

Since TRICKY Adjustable mortgages are the root cause of this CRISIS we should find ways to bypass the Mortgage Banking System using technology! The Internet databases and computer software being considered by Fannie and Freddie to deliver Low Fixed Rate Refinancing loans (my suggestion is the Fed Rate +2% or +3% plus the Fed Rate is 0%). 98% of the application can be automated followed by manual review at the end by Fannie/Freddie representatives. This service can be offered in libraries for those not having internet access.

This circumvents the Mortgage Banker Association Banks which are blocking the reworking of the existing "TRICK" loans as they have to take losses. At the very least this new direct approach forces them to either rework these old "TRICK" loans or have a "Walk-Away" which is even more costly to them.

[Peter007]

I have an adjustable rate mortgage and I pay 2.2 % Would your program make my rate go up?

[Topsailsman]

Do you hear something ticking? Ticking? Ticking?

[PhilipTaylor]

The Last $350 Billion must be used for the purpose it was intended!

To reduce the Home Owner Walk-Aways that are wiping out our neighborhoods and ruining our economy. Expert after Expert say this is what is needed since it is the ROOT CAUSE and was the intended purpose of the Bailout.

Paulson violated that trust and gave it to his friends who perpetrated this CRISIS for their own GREEDY Salaries and $30 to $100 Million Christmas Bonuses!

[Peter007]

The money was never intended to help people in foreclosure. Thats a pet project of some politicians. An earmark if you will. The intention of the bailout was to get capital back into the capital markets after there was a run on the banks in August of 2008. The banks were not lending because there was a capital shortage. It's not to be used for bridge building or helping poor widows that have no food to eat.

[Topsailsman]

Yes, the intention was to get capital back into the markets, not because of a run on banks but because none of the thieves would loan to the other thieves because they all knew that they were all thieves. Now, guess what happened? They took (or were forced to take in some cases) the bailout money, and they still won't loan to the other thieves. We need a plan that goes around, not through, this den of thieves.

[djgonebad]

Why in the world didn't the bailout start in this direction. It seems the REPUGS are so out of touch with our Nations actual needs, that the next elections will probably be the last for most of them; BECAUSE, YOU KNOW THAT THEY WON'T COME-AROUND IN TIME, TOO JUMB ON-BOARD THE OBAMA LIFE LINE.

[TJCole]

Why does Geithner want Sheila Bair fired she's the only one actually fighting for those facing foreclosur­e...

We must reset these sub prime and alt prime mortgages.­..get it done almost up to 8.7 million will eventually face foreclosure according to the FDIC and Bair..

This should have been done first with all the money Paulson wasted, and threw down a rat hole to his crooked banker buddies...

[Peter007]

There is an agency called the FHA. They are set up to insure mortgages. They insure mortgages with very High LTV ratios. They used to be assumable too without qualifying. They were great.
But because they were a government agency, their red tape and bureaucracy became burdensome. Other subprime products took over.
Allow the FHA to insure low equity loans with the right of assumability and watch the market zoom. The loans would be risky yes, but now is the time to allow risky loans with the low housing prices. The risk has diminished in this market. Cut the red tape and start making loans. Once the market recovers, we can go back to the tight credit standards but not now.

[dandypuddin]

Yes!

[JolieN]

Do we ever heard about a Repub works days and nights to come up a solusion for our country?
Show these guys some appreciation for taking on the task of cleaning the mess left by Bu$h & Cronies.

[craneman]

And to recall GHWB telling all the world that Jeb Bush would make a fine President. My God, how resilliant does he think this Grand Nation of ours really is?

[Grannysue]

Well you know all the Rethuglians will be against this guys plans, they make too much sense and help "real people" not corporate CEO'S AND HACKS. Mitchy and Bonner man will definetly be against it.

[kenstremsky]

I discussed some changes I wanted dealing with the SEC and my dislike for many parts of the Republican Party platform when I ran for the United States Senate in the Republican Party in 2002 on a Vox Populi located at http://www.thegreenpapers.com/Vox/?20020721-0

I added to my profile

Congress needs to significantly increase the power of shareholders of financial companies and significantly increase the power of other shareholders. Congress needs to make it easier for shareholders to reduce executive pay and eliminate bonuses. Congress needs to make it easier for shareholders to increase their dividends. Congress needs to make it easier for shareholders to get back executive pay and bonuses already paid out when they were not based on accurate numbers. Congress needs to make it easier for shareholders to fire executives and boards of directors. If these policies are adopted, more Americans and foreigners may be willing to invest in our country.

Sincerely,

Ken Stremsky

[Peter007]

I agree. The idea of a public corporation is that shareholders have a say in what goes on. Maybe its because most corporations are based in Delaware, I don't know, but shareholders don't have a say in corporate affairs in proportion to their holdings.
Excellent idea.

[kenstremsky]

Peter007

Thank you

I hope 2009 will be a great year for you.

What would you like to be done dealing with public corporations?

What would you like to be done to encourage investment in our country?

What would you like to be done to encourage job creation in our country?

What do you think we should do to encourage manufacturing?

What kinds of infrastructure projects would you like our country to spend money on?


Sincerely,

Ken Stremsky

[lvdragonlady]

What I would like to see is the taxpayers getting 'stocks' from all of their money being used to bail the companies out. We want stocks from all of the banks that were bailed out, stocks from the GM and Chrysler, AIG, and all of the other companies our tax dollars paid out.
Why not, it is our money, it was given to these companies, I want these companies to give us something in return.

[Peter007]

Lots of the money " lent out " was used for the purchase of preferred stocks. It may sound better than a loan ( equity vs. creditor ) but it may not be.
Bond holders are in a better position vs. stock holders should the company go bankrupt. Stock holders get paid after bond holders.
When a company issues new stock ( as per bailout plan) existing shareholders tend to flee and remove their equity investment in the company, thus the result is a loss of capital. The very thing the company needed in the first place.
No investor wants to be a partner ( investor ) in a company that the Federal Government is a major shareholder.

[OlderBudWeiser]

How about the land on which these corporations reside as collateral? An acre on Wall Street plus the buildings is worth a lot. Let all the recipients of bailout monies put up real estate. I had to do it for a small loan, 25K, plus interest.

[chocolatecity]

Obama is now a congress appeaser? When did working with congress or respecting their opinions become appeasement. Obama has been talking about helping home owners as a part of the package since the TARP package was announced.

[Name Not In Use]

Dear Mr. President:

If you want to help consumers institute a National Usury Law effective February 1, 2009.

Or, repeal the same deregulation that prevented states from protecting their own residents effective the same date.

That would put hundreds of dollars in the pockets of many consumers every month at no cost to the taxpayer.

http://www.lectlaw.com/files/ban02.htm

[joetherealist]

So even though the legal limit in my state is 10%, banks can ignore that and charge me 30%. Genius!

[dandypuddin]

I am not sure why the new regulations don't go into effect until 2010. Anyone?

[harriscrl3]

Congress is acting like a tough guy now that half the money has been spent frivilously. Way to go right in the nick of time lets use the new administration that is coming in to clean up the old administration that we failed to clean up to show that we are tough. Just like we use the auto industry that gets 15 billion to show toughness while we ignore AIG that got 85 billion

Congress is a useless waste of taxpayers dollars.

Carol

[piquet]

Use this empty housing to subsidize Obama's overall job corp infrastructure build.
Offset the cost of labor and job training by allowing citizens to buy into all this government seized bad debt and allow the assets to work for themselves.
Look...peo­ple would be willing to make $15(example) hr if their wages were offset by a very low interest loan on a home, get universal health care and competitive job training that will lead to work. Thus spending flows.
It's a win win all the way around. It no longer becomes a handout or bailout. everybody is working for their assets and the government is getting a well trained educated work force, new infrastructure and citizens taking part in their own country. As well as a stimulus that is literally a life cycle that feeds on itself instead.
I realize my idea is very simplistic. But to me it makes sense because everything gets used.

[BBackSoon]

That makes way to much sense and unless there is a way for big business to make money on the whole thing it will never be allowed to happen.

[Sundialsvc4]

"To benefit cities, homeowners, and small businesses­..."

Ooh, who WOULDN'T be in favor of THAT?

Uh huh. Right. And can I please have a cup of Motherhood and Apple Pie to go with that?

Even if you put these three ultra sugar-coated honorifics after the word "bail out," and even if you call it a "bail out," this strategy amounts to little more than Yet Another Looting of the Public Treasury.

Trillions of invented dollars are being invented and then spent, but what sort of regulation is being imposed, or even discussed? If my bank just received billions of dollars, then why do I still owe them any money? If they've got their money from somewhere else, how can they still expect it from me? And why can my bank continue to charge 35% interest on a credit-card loan, and continue to pummel me with offers (sometimes, actual cards) to get another credit card?

If my house that I bought for $400,000 is now worth $200,000 and falling, then what does anyone expect me to do but to walk away? Why is no one forcing a re-negotiation of that loan? And once again, if my bank just got a gift of billions of dollars, why, surely my $400K must be "a mere pittance part" of that? Yes, I like that: send me the deed, please.

[piquet]

Unfortunately we allowed Bush and Co. to "loot our Treasury" in the name of "security". When we starting acting like insecure children jumping at every "boo" allowing our leadership to fear us into this then we got what we deserved.
I'm sorry it all goes back to them selling a very ignorant electorate on facts that didn't add up that made absolutely NO SENSE. "Sure pappa, here's the farm, just don't let the boogy man get me".
If there is one thing we can all agree on is, "they" aren't that much smarter than us. Whether it be a bank, a corporation or a politically leader. It's all about who you know.
Next time "you" have to deal with a financial adviser, doctor or boss. Don't begin by acknowledging their superiority. Realize in your mind that it is your responsibility to be cynical and cautious.

[Peter007]

Banks did not get a gift. They received a loan that they have to pay back.
Don't borrow at 35% interest. I borrow at 0% on my credit card.
If you paid $400,000 you must be either very rich or a high risk gambler. Is the house worth only $200,000 now? How much was it worth 10 years ago ? Maybe you should hold on to it.

[BillMelater]

We don't know that banks have received loans. We don't know where the money went. And we aren't going to take some republican hack's word for it in an online forum either.

[cayuse]

First the Constitution states:

"No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time."

That fact the Treasury purchased Primary Stock at $10 for every $1 of stock purchased begs for the question WHY? There is the RUB, the motivation?

Because no one can say anything, but that this spending has done for the transfer of money from the people to the Corporations and the rich (owners of corporations)

[Peter007]

How many links do you want?

http://www.federalreserve.gov/newsevents/press/other/20081110a.htm

[cayuse]

Not sure what you are trying to say Peter. But let me explain the transfer of wealth on steroids with the bailout and Monetary Policy in general


Workers are paying all of he taxes (Income + Payroll Tax). The spend everything on durable and non-durable goods

Rich are paying little (Income at 15% capital gains, 100% from issued stock appreciation and dividends) and spend about the same absolutely as workers on durable and non-durable goods. 90% of there income + non income apprecation

[ema]

I'd like to know Geithner's and Summer's involvement with the first half of the money. And where the f is it?

[PATina]

I don't think either of them had much (if any) involvement w/ the first half. I don't even think they were nominated when the bailout was passed in Congress. W/ that being said... Geithner worked at the NY Fed... so he may have had something to do w/ the mess Wall St. found itself in... And Summers was part of the Clinton Admin whose policies aided and abetted this fiasco. But I don't think they had anything to do w/ TARP when the first half of the funds were released.

[vjoseph]

Oh please do some research before asserting anything. Tim Geithner had nothing to do with the bailout first tranche. He works at the NY Fed Bank. Ask Paulson, Bernanke and Boosh for that