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Posted at 11:15 AM ET, 12/16/2010

Government saved economy, housing market, Geithner tells oversight panel

By Dina ElBoghdady

Treasury Secretary Timothy Geithner told a congressional panel on Thursday that the administration basically saved an economy and housing market on the brink of collapse, and he defended a federal foreclosure prevention program that has fallen far short of its original goals.

In prepared testimony before the bipartisan Congressional Oversight Panel, he recapped the administration's overall push to get the economy and the housing sector back on track by immediately moving to recapitalize the banking system, free up money for consumer lending and stabilize the worst housing market since the Great Depression.

Earlier this week, the congressional panel released a report concluding that the administration's Home Affordable Modification Program is on pace to prevent 700,000 to 800,000 foreclosures instead of the 3 million to 4 million as originally predicted.

Geithner praised the program for providing a framework that the lending industry has adopted, "helping catalyze the market to provide millions of loan modifications." The loan modification program, together with a Federal Reserve program that helped drive down interest rates, "helped put a floor under housing prices, helped bring stability to house prices nationally on average, and have given a chance to millions of Americans, a chance to stay in their homes," Geithner said.

But some panel members criticized the administration for putting the banking industry ahead of troubled homeowners.

For those struggling to hold onto their homes, "it is cold comfort to these individuals that the big financial institutions aided by [the government bail out of banks] and other government programs have near record earnings," said tax lawyer J. Mark McWatters, one of the panel members.

Another panel member, Richard H. Neiman, said that while the administration did prevent a "depression-like crisis ... many people simply feel their lives have not gotten better." Neiman, New York's superintendent of banks, also urged Geithner to hold the lenders more accountable for loan modifications they do outside the government program, which Geithner acknowledged far outpace the modifications done within the federal program.

In response to questioning by the panel, Geithner said that while he feels the current issues on faulty foreclosure practices pose "serious challenges to the system," he does not believe there will be any need for another government bailout.

He said the multi-agency group investigating problems in the foreclosure process hopes to report on its findings in the first quarter of 2011 and give recommendations so that "the people that were disadvantaged by the mess are provided with some relief" and "to make sure we fix the system for the future."

By Dina ElBoghdady  | December 16, 2010; 11:15 AM ET
Categories:  Congress, Housing, U.S. Economy  
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Comments

More Geitner spin. He insinuates that TARP was the entire bailout, when in reality the separate bailouts of Fannie & Freddie have already Hoovered up 150 billion taxpayer dollars, with the possibility of another $200 billion in bailouts required, according to their oversight agency.

http://money.cnn.com/2010/10/21/news/economy/FHFA_Fannie_Freddie/index.htm

We did get some good pricing on some of the Wall Street banks, particularly Citigroup, which enabled the taxpayer to realize a profit, but GM, GMAC & Chrysler still have almost $60 billion outstanding, even after the vastly overpraised GM IPO. Yet somehow that didn't get mentioned in his testimony today. Wonder why?

Posted by: dr_drewes | December 16, 2010 3:00 PM | Report abuse

Fortunately, we have President Obama and Secretary Geitner. Certainly, had we been suffering under Republican leadership we would have lost the Automotive Industry and a large segment of the banking industry altogether. That would have increased the unemployment roles dramatically.

Republicans are focused on hating the President because he is African American. Rush Limbaugh said, he wants "The Government to fail and Americans to suffer, if that is what it takes to get a Republican back in The Oval Office".

The best the Republicans have is Sarah Palin, who presides over a family of H.S. drop-outs and a pregnant teenager.

Would you want Sarah Palin to lead America's children into a future of Physics, Computer Science and Engineering??

Posted by: Anonymous | December 16, 2010 4:02 PM | Report abuse


We're currently in the midst of the greatest mortgage refinancing frenzy of the past 5 or 6 years. Rates are now the lowest they've been since mid to late 2003, I worked with a company called "123 Mortgage Refinance" I refinanced my current mortgage to 3.12% search online for them if you are planning to do refinance.

Posted by: wiliamallen | December 17, 2010 3:07 AM | Report abuse

Anonymous,

If you want to give credit to someone for saving the banking industry, you need to thank George W. Bush, since his administration is the one that started TARP.

If TARP saved the auto industry, how is Ford, which didn't take any government money, still in business?

Do you have a citation for your Limbaugh quote that he wants "Americans to suffer"?

Posted by: dr_drewes | December 17, 2010 8:14 AM | Report abuse

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