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After pumping hundreds of billions into the banking system with not much to show for it, Fed chief Ben Bernanke says he will try to reduce the number of foreclosures. As he put it to Rep. Barney Frank: “The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank.”
It’s not clear whether Bernanke’s scheme will really benefit troubled homeowners or if their plight is just an excuse to buy up more of the banks’ junk securities, but both Rep. Frank and Sen. Chris Dodd said they were encouraged by the news.
The Federal Reserve on Tuesday took a step toward easing mortgage foreclosures threatening millions of Americans, announcing that it would write down troubled mortgages to keep people in their homes.
Fed Chairman Ben Bernanke said the initiative would specifically include $74 billion of assets held in connection with the bailout last year of Bear Stearns and American International Group.
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