Submitted by Ronald Tennant with Metrocities Mortgage:
Reuters (05/19/08); Poirier, John
Delinquencies on construction and development loans as well as on commercial and consumer debt will cause another wave of credit stress, but U.S. banks should be able to weather the storm by raising capital and increasing their loan loss reserves, says Sheila Bair, head of the Federal Deposit Insurance Corp. In remarks prepared for a May 16 Brookings Institution event, Bair added that "more proactive intervention" is needed to address the foreclosure crisis. While Democrats and some Republicans in Congress are considering a bill that would offer federal mortgage assistance, Bair said her voluntary plan to use low-cost government loans to pay down unaffordable mortgages could help about 1 million homeowners. The effort to have the mortgage banking industry modify loans is not happening fast enough, she added.
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