S&L-Like Bailout Seen For FailedHurricane Loans
WASHINGTON - (09/15/05) -- Lawmakers and financial institutionsare proposing a massive government-backed bailout for home,business and other loans hat may fail as a result of HurricaneKatrina and its aftermath. Under one scenario, the government wouldcreate a fund to buy impaired loans in storm-affected areas, thenpackage them into bonds, in a fashion similar to the S&Lbailout. The proposal was being endorsed this week by banking tradegroups, as well as some consumer groups, who are worried aboutuninsured losses accruing to homeowners and other victims of themassive storm. "We would like to be involved in the creation andimplementation of that fund, however, to ensure that consumers andhomeowners are protected as well as the financial institutions,"said Hilary Shelton, director of the NAACP's Washington Bureau,during a hearing Wednesday before the House Financial ServicesSubcommittee on Financial Institutions.