A number of stories in today’s headlines focus on banks. In particular, some address the $700 billion in TARP funds being allocated nationwide as part of the so-called bailout which were originally intended to help stimulate the U.S. economy by encouraging banks to start making loans to would-be home buyers and current owners seeking to refinance out of their current toxic loans.
As the stories below illustrate, the Obama Administration first has to figure out where the first half of those funds have gone. So, in the meantime some small banks are stepping in where the big boys won’t tread to answer the call of American homeowners who are asking them to "Show me the money!."
TARP Watchdog Will Ask Where Money Is
Zachary A. Goldfarb, Washington Post
The Treasury Department's top watchdog for the financial bailout says it's practically impossible at the moment to tell where all the money has gone and is preparing to ask every bank and company that's received a dollar from the $700 billion financial rescue to detail how the funds were used.
Wall Street Voodoo
Paul Krugman, The Wall Street Journal
Old-fashioned voodoo economics — the belief in tax-cut magic — has been banished from civilized discourse. The supply-side cult has shrunk to the point that it contains only cranks, charlatans, and Republicans.
Delays in Bank Aid Spur Frustration
David Cho and Lori Montgomery, Washington Post
A massive backlog of bank applications for emergency federal aid has provoked widespread frustration over how the Treasury Department is allocating rescue funds and raised suspicions among executives that political connections are playing a role, industry officials and regulators say.
By Switching Their Charters, Banks Skirt Supervision
Binyamin Appelbaum, Washington Post
At least 30 banks since 2000 have escaped federal regulatory action by walking away from their federal regulators and moving under state supervision, taking advantage of a long-standing system that allows banks to choose between federal and state oversight, according to a Washington Post review of government records.
New refinance boomlet may lift economy, a bit
Mark Trumbull, Christian Science Monitor
Record low mortgage rates aren’t proving to be an easy fix for the troubled US housing market, but they are providing a measure of much-needed stimulus to the economy.
Small Banks Move Into Mortgage Market as JPMorgan Fears to Lend
Dan Levy and Ari Levy, Bloomberg
Matthew Stubbs said the mortgage choice was easy when he bought his Seattle dream home: Pay less than 6 percent to locally based HomeStreet Bank, or a percentage point higher and $3,400 extra in fees to Wells Fargo & Co.
And here’s a couple of related stories…
Pelosi Backs Letting Courts Modify Troubled Mortgages
Renae Merle, Washington Post
House Speaker Nancy Pelosi yesterday gave her support to legislation that would allow bankruptcy judges to modify troubled mortgages, saying it is a "very high priority and should be passed as soon as possible."
Fed Likely to Keep Focus on Rates, Loans
Jon Hilsenrath, The Wall Street Journal
Federal Reserve officials are likely next week to stick closely to their approach for handling the financial crisis -- near-zero interest rates and a focus on special lending programs -- despite internal rifts about some of their tactics.