More Must Be Done to Stop Foreclosures
Foreclosure filings were at historic highs in March -- 367,056 -- an increase of nearly 19 percent from the previous month, and the highest monthly total since 2005, according to RealtyTrac. Almost two years after the onset of the financial crisis with unemployment at historic highs, nothing is being done to put a stop to this on-going tragedy.
Today, the Real Economy Project of the Center for Media and Democracy (CMD) released an update of our Wall Street Bailout accounting that unlike other bailout assessments includes Federal Reserve loans. CMD finds that the Federal Reserve, the U.S. Treasury and FDIC combined have disbursed a total of $4.7 trillion on the bailout of which $2 trillion is still outstanding.
This month, CMD took a closer look at the housing issue. Our assessment also shows that the Federal Reserve and the U.S. Treasury have disbursed $1.6 trillion in an effort to prop up the mortgage investment market through purchases of mortgage-backed securities and Fannie Mae and Freddie Mac debt. The majority of this money was from the Federal Reserve and was not subject to Congressional debate or approval.
Yet, at the same time, the U.S. Treasury Department has spent a small fraction of this amount, $90 million, on the Home Affordable Modification Program (HAMP). HAMP is the only Congressionally-authorized program that is actively spending money and designed to prevent foreclosures.
$90 million is a pittance in the face of the foreclosure onslaught, (the program is authorized for much more), but these funds are being subject to strict scrutiny by the TARP Congressional Oversight Panel, headed by Elizabeth Warren. Her latest figures document the abject failure of this program to stem the crisis. As of February 2010, only 168,708 homeowners have received final, five-year loan modifications - a small fraction of the 6 million borrowers who are presently 60+ days delinquent on their loans.
More must be done to stop the daily tragedy of American families losing their homes. $1.6 trillion has gone out the door with little discussion or debate on Capitol Hill. Congress should give the Federal Reserve funds the same level of scrutiny that HAMP has received and consider attaching some strings to these funds to force banks to do more to assist American households. With 30 million Americans still unemployed or underemployed, housing experts and policymakers need to go back to square one on this issue to figure out how to best aid homeowners and devastated communities for the long run.
The Senate also needs to move on Federal Reserve transparency and accountability. Our Wall Street Bailout accounting illustrates that the bailout it still underway and it underscores the need for a full and public audit of the Federal Reserve and all of its programs. The Senate financial reform package includes an extremely limited audit of the Federal Reserve, which withholds key information from the public for extended periods of time. An amendment will be offered to the Senate bill to apply the more robust Ron Paul-Alan Grayson audit language from the House financial reform bill.
Learn more about the 35 programs included in CMD's bailout tally by visiting our Total Wall Street Bailout Cost Table, which contains links to pages on each bailout program with details including the current balance sheet for each program. CMD also publishes a Financial Crisis Tracker, a widget for the table that can be downloaded to websites to get up-to-date numbers on the financial crisis and the bailout.