Geithner Focused on Foreclosure Relief Effort
Washington-New Treasury secretary Timothy Geithner doesn’t have very much time to put together a comprehensive plan to stabilize the banks, increase the flow of credit and curb rising foreclosures.
President Barack Obama expects parts of this plan will be unveiled as Congress continues its work on the massive economic stimulus package that the House passed recently.
This plan will offer banks several assistance options - such as capital infusions and loss-sharing arrangements or guarantees on distressed assets. Banks could also be given the option of selling defaulted or illiquid assets into a government-run “bad bank.”
At his recent swearing-in ceremony, Mr. Geithner said the administration intends to move quickly and “launch programs that will bring economic recovery sooner.”
The new cabinet secretary has worked at the Treasury Department before and most recently served as president of the New York Federal Reserve Bank where he was involved in the rescues of Merrill Lynch, AIG and Citigroup.
New housing secretary Shaun Donovan also worked at the Department of Housing and Urban Development during the Clinton administration when he was a deputy assistant secretary. At his confirmation hearing, Mr. Donovan acknowledged that originations of Federal Housing Administration single-family loans tripled over the past year. FHA has “capacity issues that require immediate attention,” he said.
But he stressed that “job No. 1” is putting together a “bold” foreclosure prevention plan.
This plan also is expected to offer several options - such as an FHA refinancing program for underwater mortgages and a Federal Deposit Insurance Corp. program that provides loan guarantees for newly modified mortgages. Meanwhile, Brian Montgomery continues to run the FHA program. But possible candidates for the FHA job include Bart Harvey, former chairman of the Enterprise Community Partners, and Shekar Narasimhan, managing partner at Beekman Advisers.