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Barney Frank Aims a Hit

Posted January 3, 2010 by Matthew Denton

A new proposal is sought to help struggling homeowners.

House Financial Services Committee Chairman Barney Frank has an idea that seeks to modify a 1970s proposal. The Associated Press writes, “He is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay their mortgages… Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program… It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.”

While we think this is a good idea, critics could backlash Frank for putting yet again another bold idea in public. It could go wrong in some ways. First, he’s betting on a plan that those who’d take out these loans can recover from their underwater status within two years or less. It’s obviously risky considering the rate of joblessness in the country today. Perhaps, the number of jobseekers with college and post-graduate degrees still hasn’t made an impact on him.

Second, we’re pretty sure that the bailout recipients are going to mock his proposal for letting their interest payments be utilized by the public. Remember, not even the Wall Street downturn has taught corporate America to reduce their greed. So Frank should be ready for their loud scoffing, accusing him of planning to take advantage of the bank’s situation in order to raise revenue for the government. Isn’t it right that some banks were forced to accept the TARP?

One thing’s for sure. This idea is either a hit or miss.

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