Big Banks Can Fund Mortgage Aid Programs If Government Won’t, Says Democrat Barney Frank
As budget-conscious House Republicans try to kill a $1 billion program to help unemployed Americans avoid foreclosure, Democrat Barney Frank today suggested another funding source: Require the big banks to pick up the tab.
A recent Financial Reform Watch story looked at Republican criticism that the Home Affordable Modification Program (HAMP) and other anti-foreclosure programs have so far helped relatively few homeowners. Frank’s successor as chairman of the House Financial Services Committee, Republican Spencer Bachus, is pushing to eliminate the programs while Democrats have urged ways to improve them.
Frank said he will offer legislation that would require big banks to fund a $1 billion program that helps unemployed Americans pay their mortgages for up to 12 months by providing interest-free loans. The program, run by the Housing and Urban Development Department, was designed to help about 30,000 unemployed homeowners.
“I don’t mean to demonize, but I think Goldman Sachs, and Wells Fargo, and the Bank of America, and Citicorp, and Morgan Stanley, and the large hedge funds, I think they can pay for this,” Frank said on the House floor , The Hill reported today (3/11/11).
The big banks “can afford this billion dollars,” said Frank, who co-authored the Dodd-Frank financial reform law. “Their bonuses alone would pay for these programs.”
The House voted to end the HUD program. “The money from this program doesn’t go to the homeowner, it goes to the lender, it goes to the banks. And who pays for it? The taxpayers and ultimately our children and grandchildren because the federal government borrows 42 cents of every dollar it spends,” said Bachus.
On Thursday, the House also voted to pull the plug on the $8 billion Federal Housing Administration program that provides FHA-insured loans to help underwater homeowners refinance if the lender first writes off at least 10 percent of the principal.
Next week, the House is expected to vote to terminate HAMP, a $50 billion program created by the Obama administration. HAMP has been criticized by a government watchdog for hurting some homeowners who seek mortgage modifications, and for approving relatively few permanent modifications.
However, the House votes are seen as mostly symbolic because the Democratic-led Senate is not expected to take up similar measures.