Senate Banking Committee Chairman Chris Dodd backed the Obama administration Tuesday in its opposition to a blanket foreclosure moratorium, despite the allegations of faulty paperwork that prompted several lenders to suspend foreclosures in 23 states and Bank of America Corp. to halt them nationwide.
Speaking at New York University Law School's fourth annual global economic policy forum on Tuesday, Dodd said that he believes a national foreclosure moratorium could unnecessarily hamper the housing recovery. Instead, he said, lenders should individually and quickly assess their foreclosure practices and address problems aggressively but "intelligently."
A moratorium "across-the-board … , I think, would be very harmful to the economy," the Connecticut Democrat said.
Dodd said a universal halt of foreclosures could hurt taxpayers, since the government-sponsored enterprises, Fannie Mae and Freddie Mac, remain in government conservatorship at taxpayers' expense.
"You are going to have a problem already with Fannie and Freddie," he said. "They've already announced, I think in the last 24 hours, [that] they are going to hold lending institutions liable for activities they've engaged in that would otherwise cost Fannie and Freddie additional burdens to the American taxpayers."
Dodd said other lenders should follow B of A's lead and quickly assess their policies.
"I think Bank of America seems to be on that track, and I urge them to continue to do that under its new leadership — to determine exactly what that exposure could be and then address those questions very aggressively," he said.
Dodd added that Congress would further probe the reasons for the shoddy foreclosure paperwork in a hearing after the elections in November.
Later, on Bloomberg Television, Dodd added that, in the planned hearing, lawmakers will evaluate what steps Congress could take to remedy the situation but said he hopes it is corrected before then.
"I'm having a hearing on Nov. 16 to determine what steps if any Congress ought to be taking. My hope is, a month from now we'll have greater clarity on this," he said.
Also on Tuesday, Robert Gibbs, the White House press secretary, said that the administration supports an investigation into the foreclosure allegations but is leery of "unintended consequences [from] a broader moratorium." He specifically raised concerns about the housing recovery.
