Sheila Bair Feels Foreclosure-Triggred Housing Agony Will Continue Through 2010

Sheila Bair, the chairperson of FDIC, feels that the foreclosure-triggered housing agony will continue through 2010. It will require time for the credit markets to recover and for the governmental measures to have a visible impact on the economy. She added that regulators were gearing up for a difficult year as the economy reels under the worst economic blow since the 1930’s. Unemployment is making matters worse as thousands of borrowers are defaulting and facing foreclosures.

Bair said, “We think we’re going to have a tough year next year and we’re preparing for that. But we’ll work through it. By 2010 we’ll be seeing the light at the end of the tunnel”. She was speaking against a background of reports showing a fall in foreclosure numbers in November since the promulgation of new laws by states aimed at postponing the foreclosure process.

Over 259,000 houses across America got a notice connected with foreclosure in November. It calculated to a lowering of numbers by 7% from October but it is 28% higher than what it was a year ago.

Bair laid stress on the fact that 90% of banks and thrifts in USA continue to be financially strong. So far this year 23 banks have collapsed in the middle of the economic mayhem. In 2007 three banks had failed. The government is pumping in billions of dollars as direct investment into the banks as well as into the FDIC programmes that guarantees new loans. The target is to allow the flow of cash that had frozen the credit markets. Banks are being encouraged to lend.

But the government is far behind when it comes to helping the foreclosure victims facing eviction. Bair bemoaned, “We’re still behind, very much behind, the curve.”

Debate on this matter has intensified. President-elect Barack Obama is insisting that the government utilize some cash from the $700 bail out to stem the tide of rising foreclosures. Bair echoes these sentiments.

Sheila Bair is an independent regulator. Although a Republican she broke off with the Bush government in pushing through her plan to utilize $24 billion to help 1.5 million foreclosure victims by guaranteeing loan modifications. She opined that she “wished a structured program would have gotten under say sooner.” Many times she showed her frustration during several interviews. It is hoped that with Obama taking over the reins next January a new age of reason will dawn.