FDIC Head: Keep People in Their Homes

The front page of today’s Wall Street Journal features an article on Federal Deposit Insurance Corp. Chairman Sheila Bair calling on the federal government to do more to keep people in their homes. She echoes an analysis that NDN offered a month ago: that home foreclosures are at the root of this financial crisis and that the federal government must work to keep people in their homes.

Federal Deposit Insurance Corp. Chairman Sheila Bair on Wednesday criticized the federal government for failing to take more aggressive steps to prevent Americans from losing their homes, highlighting a rift between her and other senior U.S. officials over terms of the $700 billion rescue package.

The government plan will help stabilize financial markets but it doesn't do enough to address home foreclosures, the root of the crisis, she said in an interview with The Wall Street Journal."Why there's been such a political focus on making sure we're not unduly helping borrowers but then we're providing all this massive assistance at the institutional level, I don't understand it," she said. "It's been a frustration for me."

Ms. Bair has argued the plan should have a bigger focus on homeowners, whose travails are at the heart of the current crisis. Until home prices stop falling, financial markets and the economy are unlikely to stabilize. "This agency, probably as much as anybody, given our genesis in the Depression, has a sense of purpose now perhaps more than any other agency," Ms. Bair said.

Blair’s call is a welcome sign of the growing consensus of the need for a smarter approach from the government on the financial crisis. Keeping people in their homes is not just a moral issue or good politics, it’s crucial to the economy. If the government fails to stabilize the housing market, the financial cave-in will continue. For more on NDN’s campaign to Keep People in Their Homes, click here.