The Obama Administration’s proposed fiscal year 2011 budget includes shifting the Treasury Department
’s focus of the Troubled Asset Relief Program (TARP) away from large financial institutions to a renewed focus on foreclosure prevention efforts and small businesses and unemployment.
The Treasury said along with a new "focus on the challenges of helping families avoid foreclosure," TARP will aim to bring down unemployment from record highs. Other initiatives in the budget include $30bn in TARP funds to help community and smaller banks extend credit to small businesses and $500m in efficiency savings in the Treasury Department, including using paperless processing for electronic benefit payments and tax collections.
“After stabilizing our economy and steering it back from the brink this past year, this budget reflects the President's commitment to invest in innovation and reform our financial system,” said Treasury secretary Timothy Geithner.
An estimated 4.5m homeowners are “on the brink” of losing their homes, according to Mike Dawson, Freddie Mac
vice president of deal and contract management, who spoke Monday at the American Securitization Forum
(ASF) 2010. He added that the agencies will continue to push refinancing over modifications in an effort to make these homes affordable.
“We must make investments to put our country back on a path to economic prosperity, but do so in a way that is efficient and constrained," Geithner said. "This budget supports the critical work that Treasury is doing to encourage economic growth and ensure that the financial industry plays by new, safer rules.”
The Treasury said the projected cost of TARP decreased from $341bn in the mid-session review to $117bn in the budget, and the additional $250bn reserve in place to cover additional financial stabilization efforts was removed. Despite the bit of good news provided by the revised projection, TARP's special inspector general recently warned government intervention in the housing market could create a second bubble
Write to Austin Kilgore
The author held no relevant investments.