Vital Part of Housing Bill Is Brainchild of Banks

Washington Post (06/25/08) P. D1; Birnbaum, Jeffrey H.
A provision in federal housing legislation up for consideration in the Senate that would require banks to write down the value of troubled loans so that borrowers could refinance into FHA-insured mortgages was originally recommended by Credit Suisse and Bank of America, report congressional staffers. Despite concerns from critics that the banks that caused the foreclosure crisis played a significant role in developing the legislation, congressional staffers insist that other banks, industry groups, financial regulators and low-income housing groups were consulted as well. According to House Financial Services Committee Chairman Barney Frank, D-Mass., "The alternative to having the banks as participants was a massive federal bailout. They [the banks] benefit, but they benefit by losing less."