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FDIC Chairman Bair Continues to Buck Treasury on Loan Modifications

Sheila Bair, the outspoken Chairman of the Federal Deposit Insurance Corporation (FDIC) is continuing to oppose the U.S. Treasury Department's unwillingness to create a massive...
December 23, 2008

Sheila Bair, the outspoken Chairman of the Federal Deposit Insurance Corporation (FDIC) is continuing to oppose the U.S. Treasury Department's unwillingness to create a massive loan modification program to help homeowners avoid foreclosure.

Blair acknowledged continued disagreement with the Treasury Department about using funds from the Troubled Asset Relief Program (TARP) for a nationwide loan modification program. Bair has proposed using $24 billion in government financing to help as many as 1.5 million homeowners avoid foreclosure, but other members of the Bush administration have been hesitant to enact the program. 

"There are some who question the effectiveness of loan modifications," Bair said. "They point to recent data suggesting that many modified loans end up re-defaulting, putting homeowners back in trouble. I beg to differ." She said creation of a "fast-track, nationwide" program will be needed to end the U.S. housing crisis.

Incoming Treasury Secretary Timothy Geithner reportedly wants to push Bair out of her post. According to a Bloomberg report, Geithner doesn't think she's "a team player," fighting for her agency rather than the good of the entire financial system. House Financial Services Committee Chairman Barney Frank (D-Mass.) recently spoke in favor of Bair, a Republican, saying the current resistance to doing more about foreclosures could be the result of ruffled male feathers. "I think part of the problem now is that, to be honest, Shelia Bair has annoyed the Old Boys Club." He likened the situation to several regulators "up in the treehouse with a 'No Girls Allowed' sign."