Banks warned to start lending
Senate committee grills bankers over $700 billion bailout. Dodd: ‘We want to see more progress.’
The head of the Senate Banking Committee says banks receiving money as part of the $700 billion federal bailout must step up their lending to consumers and businesses. Banks are failing to use public funds to make credit more available and to help troubled homeowners, said Sen. Christopher Dodd, D-Conn. Congress did not pass the bailout plan so banks could hoard the money or use it to scoop up faltering rivals, he said.
“We want to see more progress from our friends in the financial sector — more progress in foreclosure mitigation, in affordable lending, and in curbing excessive compensation,” Dodd said. “And if that progress is not forthcoming, we are prepared to legislate.”
Bank executives, however, said they are both lending and working with delinquent homeowners. Democrats are concerned that banks are not increasing their lending, despite getting capital infusions from the government. They also want to move faster to help the homeowner. Republicans, meanwhile, want more disclosure on how the Treasury Department is carrying out the plan.
REAL Trends Comment: So now the Congress, led by Senator Dodd(ge), are threatening banks if they don’t lend. This is the same Senator who is alleged to have received hundreds of thousands of dollars of below market priced favorable loans from Countrywide. The answer is not more government coerced lending but, as called for by Realogy, NAR and others, long term low fixed rate loans to soak up the excess of inventory. Such a move would begin to firm up pricing in houses and head off more foreclosures.