Head of FDIC Supports Loan Write-Downs
The possibility of solving the underwater mortgage problem by writing down principal has been deemed politically impossible by the Obama administration, but some government officials see write-downs as the best long-term solution.
One of the most outspoken supporters of write-downs is Federal Deposit Insurance Chair Sheila Bair. This week, she called underwater mortgages a continuing problem and said the FDIC is “actively looking” at ways to encourage principal write-downs in the deals it does to facilitate acquisitions of failed banks.
Overall, Bair was positive about housing finance. “After three long and difficult years for housing and mortgage finance, I think we’re seeing some progress in stabilizing our housing markets,” she said.
Source: Reuters News, Karey Wutkowski (03/04/2010)
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