$700 Billion Plan – More Questions than Answers
Treasury Secretary, Henry Paulson, along with Federal Reserve Chairman, Ben Bernanke, is calling for Congress to act swiftly to put their proposal into action. However, at the Senate hearing held on Tuesday, both Democrats and Republicans demanded clear answers and assurances on a number of issues and it soon became evident that there are indeed, more questions than answers. In the face of growing outrage among American taxpayers, many of whom are facing foreclosure on their homes, lawmakers are under increasing pressure to ensure that American homeowners benefit from the scheme, and that taxpayers are guaranteed some form of protection. The proposal offered by the Treasury will no doubt benefit the financial institutions, but is very sketchy as to the other issues raised by Senate Banking Committee Chairman, Christopher Dodd, D-Conn – refer to yesterday’s article “Caution Called For In $700 Billion Bailout Plan”.
The general consensus among members of the public, who have voiced their extreme discontent at the proposal, is that the taxpayer is left footing the bill, while the financial institutions being offered assistance are, in effect, being rewarded for bad management and bad decision-making. Many feel that it would be handing taxpayers’ money over to the people are responsible for the mess in the first place and question what guarantees there are that they will get it right this time around. The news that the FBI is investigating Freddie Mac, Fannie Mae, Lehman Brothers and AIG, along with their executives, to either rule out or uncover fraudulent dealings, only intensifies the general air of uncertainty, and even foreboding, which is currently plaguing investors, markets and the general American public.
Earlier this month, Congress was informed by FBI Director, Robert Mueller, that 1,400 individual real estate brokers, lenders and appraisers, as well as 26 sub-prime lenders, are currently under investigation as part of a mortgage fraud inquiry. As the investigation is currently in progress, the FBI would not disclose which companies were included in the inquiry. It has been disclosed, however, than the Mortgage Fraud Task Force of the FBI, assisted by the IRS, arrested more than 400 mortgage lenders, brokers, appraisers and other mortgage industry insiders who are believed to be responsible for in excess of $1 billion in losses. Moreover, a study conducted in August by the Mortgage Asset Research Institute (MARI), revealed that the number of fraudulent loans that were issued in the first quarter of 2008 increased by 42 percent when compared with the first quarter of 2007. All this is an indication that the rot may have set in even deeper than originally thought.
While it is true that its impossible to please all of the people all of the time, the American public have a right to expect that the government they pledge their allegiance to will ultimately do what is in the best interests of its citizens.