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Renita Jablonski: On this Thursday morning, our special coverage of the fallout of the financial crisis starts with housing. After dealing with the credit and banking crisis, the Bush Administration looks ready to take on foreclosures. FDIC Chair Sheila Bair is speaking to the Senate Banking Committee today. The Wall Street Journal says she’ll offer a plan encouraging banks to keep troubled homeowners in their homes. Marketplace’s Dan Grech has more.

Dan Grech: For months now, there’s been a passionate debate on Capitol Hill over whether to assist homeowners who are in over there head. But a consensus is now emerging that we have to slow the rate of foreclosures.

James Angel is a professor of finance at Georgetown:

James Angel: I personally agree with Sheila Bair that it can make good economic sense for the taxpayer to make an investment, through some kind of tax credit, to help resolve this in a smooth way.

But renegotiating mortgage terms is difficult, because loans have been parceled into complex securities. To make matters worse, some homes have second mortgages, bringing another set of players to the table. And no one wants to bail out speculators.

Angel: When you’ve got somebody who’s underwater in their mortgage, and they can afford to pay the payments on their current market value but not on their existing level of debt, our society has an interest in keeping that person in the house.

RealtyTrac says foreclosure filings in the third quarter were up 71 percent from a year ago.

I’m Dan Grech for Marketplace.

Jablonski: Alan Greenspan will also go in front of Congress today. In prepared statements, the former Fed Chief says the current crisis is quote a
“once-in-a-century credit tsunami.”