Fallout: The Financial Crisis

FDIC chair speaks out against bailout

Andrea Gardner Oct 16, 2008
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Fallout: The Financial Crisis

FDIC chair speaks out against bailout

Andrea Gardner Oct 16, 2008
HTML EMBED:
COPY

TEXT OF STORY

Kai Ryssdal: Popular anger over the government giving more help to big banks than to homeowners has gone public inside the Bush administration. The chairman of the Federal Deposit Insurance Corporation is publicly criticizing the bailout package. Sheila Blair says it doesn’t do enough to help Americans about to lose their homes. As Marketplace’s Sarah Gardner has that story.


Sarah Gardner:
FDIC chairman Sheila Blair told the Wall Street Journal she’s frustrated with the bailout package. She said defaulting borrowers were at the root of the crisis. “So why not tackle the borrower problem?” she argues. Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson, on the other hand, have been focused on saving banks. John Taylor, president of the National Community Reinvestment Coalition, says Paulson and Bernanke aren’t thinking outside their box.

John Taylor: I think they’re from that club. Their club is Wall Street. That’s where they come from. Their orientation is that. That’s how they see the world working. And they just thought they had a lot more time to deal with the homeowners problem. And they don’t.

We’re talking about potentially helping millions of struggling homeowners. Taylor says the country’s facing 300,000 home foreclosure filings a month. But backers of the bailout plan, including the Financial Services Roundtable, a Wall Street lobbying group, say there is help for homeowners through programs like the Hope for Homeowners program. Spokesman Scott Talbott defends the bailout plans’ “banks first” approach.

Scott Talbott: The financial institutions are the engine of the economy. They are the oil in the system. If they cannot lend, then all other services shut down. So, it’s better to do a wholesale approach with the economy that benefits everybody, than work from the reverse.

But one mortgage consultant who wants more in the bailout package for homeowners says housing was the catalyst for the economic crisis. Housing got us in, he says. Housing’s got to get us out.

I’m Sarah Gardner for Marketplace.

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