Washington May Give Aid in Housing Crisis

[May 9, 2008.]

 

Neighborhoods negatively affected by the recent housing foreclosure crisis may find help on the way from the government. Today, the Financial Services Committee of the House of Representatives discussed different ways to help those who have suffered financial loss as a result of the recent spate of foreclosures.

The Committee Chairman Barney Frank (D-Mass.) and Rep. Maxine Waters (D-Calif.) proposed that the federal government devote $15 billion to helping city and state governments respond to financial issues related to the foreclosure crisis.

According to the initiators of the measure, this would allow local governments to buy some of the many homes that have been foreclosed as a result of the crisis. In this way, argue the measure's supporters, banks and credit unions will experience some relief in responding to the mass of defaulted loans that they now face. This government aid to local banks and credit unions should, in theory, help local communities recover economically from the foreclosure crisis.

However, Republicans on the committee tend to be against the proposed measure. They argue that the measure is expensive and unnecessary. Instead of helping the economy, argue the Republicans, the measure will only encourage speculators to try to derive profits from more properties being foreclosed.

Neither the National Association of Federal Credit Unions (NAFCU), nor the Credit Union National Association, have taken a stand on the proposed measure. However, Brad Thaler, NAFCU's Director of Legislative Affairs, has affirmed that the proposed measure does, indeed, stand to benefit credit unions.

Additionally, Committee Chairman Barney Frank has proposed that the federal government create a special fund to insure financial institutions against future situations resembling the current foreclosure crisis. The  government is to provide up to $300 billion in refinanced mortgages to affected institution