Banks to Take Action Against Foreclosures

by Peter Vernon on Stop Foreclosures

Rep. Barney Frank, the Head of the House of Financial Services Committee, said on Thursday that the new Treasury Department under president-elect Barack Obama will be more transparent about the bank bailout funds. This is to make sure that money goes to the right places, being able to rescue homeowners and preventing more foreclosures to happen.

In an interview, Rep. Frank told The Early Show in CBS that the Tresury Department will impose stronger rules and restrictions on banks. Legal penalties and other measures will be imposed so that financial institutions will be able to use properly the funds which will be given to them.

A meeting between the eight biggest financial institutions in the US and the new US government was held last Wednesday to clear out plans and regulations about the new bailout plan. Banks such as Citigroup and Bank of America have already committed to more transparency, so that they will be able to regain the public’s trust.

Banks are set to receive bailout funds from the Troubled Assets Relief Program or TARP, to make room for adjustments so that mortgage loaners and other clients can prevent foreclosures and keep their properties and assets.

TARP released its first $350 billion worth of bailout funds under the Bush administration. However, there have been a lot of negative opinions and criticisms against this, because pf the previous administration’s lack of transparency. Moreover, banks did not allocate the fund to mortgage adjustments and other assistance to troubled homeowners who were facing foreclosures. Instead, they spend it to inject capital in other institutions such as US automakers. This was not taken well by the citizens of the US as well as by the Congress.

Late last year until January of this month, states have been passing Senate Bills to help alleviate the problem of increasing foreclosures. Mortgage adjustments as well as moratoriums on foreclosures were released. So far, this has turned out positive effects, as the number of foreclosures in various states such as California and Florida has already decreased.

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