The Treasury announced it will not use any of the $700 billion from the ESSA to buy bad mortgages.
According to a report in the San Franciso Chronicle -
saying it would not use the $700 billion rescue fund approved by Congress to purchase bad mortgage securities but instead will continue pumping money into banks to boost their lending ability while it looks for ways to get more money flowing for school loans, credit cards and other consumer purchases.
Although Paulson abandoned the plan he pitched when he sold the bailout to Congress, an aide to House Speaker Nancy Pelosi said she was never keen on buying subprime mortgage securities and considers Treasury’s current course – investing $250 billion into banks – a better financial fix. (1)
Paulson is quoted on MLive saying -
“Over these past weeks, we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets,” said Paulson. “Our assessment at this time is that this is not the most effective way to use TARP funds.”
Paulson’s comments came as his frequent ally in Congress, House Finance Services Committee Chairman Barney Frank (D., Mass.), urged the secretary to be more flexible in using the rescue funds on two fronts: aid to the auto industry and foreclosure relief for homeowners.(2)
I find this to be amazing. Paulson sold the plan TO congress based on buying out the bad mortgages. Now Paulson, et all., have changed course and decided that they will not be doing what they said they would do. Things will be different under the Obama administration, right?
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