As President Obama rolls out his $75 billion aid program
to stem the tide of foreclosures among cash-strapped Americans, one key point should be emphasized: Banks participating in the government's $700 billion financial bailout are required to help modify home loans, according to the administration.
"[W]e have guidance as part of [the Troubled Assets Relief Program] that anyone receiving TARP funding must participate in this program," Housing and Urban Development Secretary Shaun Donovan told reporters today.
It sounds like the Obama team has learned its lesson from the framework of the bailout, which offered injections of capital in the hopes that banks would be enticed to jump-start lending -- with predictably shoddy results, as banks have largely hung onto
the government's cash.
But this enforced participation in mortgage modifications brings up another question ... why can't bailed-out banks be forced to abide by Congress' new executive compensation limits