TARP to be expanded?

The TARP is under scrutiny from the FDIC. You may know that TARP is an acronym for Troubled Asset Relief Program. It is basically designed to help the financial system as a whole, not aid individual home owners. So that is why all the money is going to banks. The problem is that the banks are hoarding the money. They are buying other healthy banks with the money. But they are very slow to help homeowners by offering workouts on these mortgages.

The Bush Administration is bearish on assisting homeowners with their mortgage crisis and has said it is against using the TARP as a foreclosure prevention program. Instead, they want to assist banks and the hope is that the banks will unfreeze funds and start lending again, thus reviving the economy.

The FDIC, under the tutelage of up and coming whipper snapper Sheila Bair has vowed to press ahead with a proposal to force banks to enter into more workout deals with borrowers. Ms. Bair wants to see more assistance going to Main Street, and a bit less to Wall Street.

The problem is that Bair does not have the authority, on her own, to go over the head of the President and his appointees such as the Treasury Secretary and the Federal Reserve (by the way, I wonder whatever's become of Bernanke?)

In any event, according to Reuters, Bair does have a lot of support on this from the Democrats. Check out the article on Reuters here.