Who would've believed it? Here's a Bush appointee who's actually making sense!

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Who would’ve believed it? Here’s a Bush appointee who’s actually making sense!

Sheila Bair is her name, and she was appointed by George W in 2006 to be chairwoman of the Federal Deposit Insurance Corporation, which is a bank regulatory agency. Bush regulators, as we’ve learned in sad case after sad case, tend to be industry lapdogs, rather than public watchdogs, so it’s a refreshing surprise to find one on the side of the folks.

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Ms. Bair, who has extensive banking experience and once worked for Republican Senator Bob Dole, is pushing a straightforward plan to help millions of lower-income famlies who are losing their homes in the subprime lending crisis sweeping across our country. She rightly notes that their losses are the result of poor lending standards and weak consumer protections in this unregulated industry. While these families were lured into homes with “teaser” interest rates of about seven percent, the small print in the contracts cause the rates to “reset” after a couple of years, hitting the families with sudden increases of a third or more in their monthly payments.

This is now causing a flood of defaults, endangering the banks themselves. But rather than bailing out the banks, as other regulators advocate, Ms. Bair says the banking system itself should step in and restructure the loans of all subprime borrowers who’ve been making monthly payments, but can’t afford the “reset” rates.

She points out that by simply putting those rates back at seven percent, families can stay in their homes and keep making payments, lenders will still make money, the exorbitant cost of foreclourses will be avoided, and the housing market can begin to recover – without taxpayer dollars being dumped into another banker bailout. It’s a common-sense way to solve the problem by helping the people who really need the help.

Now, all we need is for Bush to listen to Ms. Bair, rather than the bankers. Good luck on that.

“Fix Rate to Save Loans,” New York Times, October 19, 2007

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