FDIC chairman Sheila Bair has been talking with the Obama transition team about funding a loan guarantee program to facilitate loan modifications and she is encouraged by president-elect Barack Obama's commitment to foreclosures prevention. "We are certainly sharing our best ideas," Ms. Bair told a Fortune 500 forum. The FDIC has developed a systematic loan modification program that could be expanded through the use of loan guarantees or loss sharing arrangements on newly modified loans. But the Bush administration has blocked funding for the loan guarantees. Ms. Bair said such a program could prevent one-third of foreclosures and help stabilize housing prices, which continue to spiral downward due to "unnecessary foreclosures."
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