spc

Banks Said That Bailout Cash is for Foreclosure Loans not Payments

December 8, 2008

Bank officials in the country announced their stand on the funds of the bailout program by the US government.

Banking officials, in an attempt to assure lawmakers, said that the $700 billion bailout fund for the financial industry will be used to help delinquent borrowers avoid foreclosures. They made the statement to quell down news that, instead of using the funds on programs that could decrease the number of foreclosure properties, lenders will use the funds as payments for expenditures.

JP Morgan’s Chief Risk Officer Barry Zubrow assured the Senate Banking Committee that their lending company will be using the funds to help rewrite their terms of mortgages. Zubrow also said that part of the $25 billion capital infusion that JP Morgan received from the Treasury will be used in the promotion of loans. He said that the lending company is also finding ways to help its borrowers prevent foreclosures.

Along with other executives from Bank of America, Goldman Sachs Group, Wells Fargo, Zubrow told the Senate committee that none of the $75 billion fund that they have collectively received from the Treasury will be used for paying salaries, bonuses and other company expenditures. In the same light, Regional Banking President of Wells Fargo, Jon Campbell, said that their company does not need funds from the government to pay their operation expenditures. He also stressed that the company will cooperate with the government for programs to stop foreclosures.

After the company executives gave assurance that the funds they received will be used to help in the plan to decrease foreclosure properties, lawmakers still stood firm on their ground. Senator Chris Dodd, chairman of the committee, emphasized that hoarding of capital and acquisition of banks are not the reason behind Congress’ approval of the $700 billion funding.

Senator Charles Schumer said that he and other senators are considering options to require banks to grant more loans. He also mentioned that Congress can still halt the release of the second $350 billion funding if the situation will call for it. All these proposed steps are in line with the government’s aim to stop the growing number of foreclosure homes to help the housing industry.

Related Posts:

Comments Off
Filed under category:Foreclosure Filings

Comments are closed.

corner