picked up BAC, C, WFC after hours
C @ 3.50, bac @ 6.44, wfc @ 16.02 plan on holding, I think the news will push financials for a few days.....
Fed launches program seeking to stem foreclosures
WASHINGTON (MarketWatch) -- After years of pressure from lawmakers on Capitol Hill, the Federal Reserve launched a program Tuesday seeking to stem the tide of foreclosures sweeping the nation. The plan seeks to allow regulators to rewrite mortgages owned by the Fed so that borrowers on the verge of losing their homes can have more relaxed terms if they can demonstrate that they won't re-default on the revised mortgage.
Fed Chairman Ben Bernanke, writing in a letter to House Financial Services Committee Chairman Barney Frank, D-Mass., said the policy is intended "to avoid preventable foreclosures on residential mortgage assets." It was not immediately clear how many mortgages qualify for the program. The Federal Reserve Bank of New York plans to buy $500 billion in mortgage securities by mid-year, according to a plan unveiled in November.
So far the bank has bought nearly $53 billion in mortgage securities as of Jan. 21. It is likely, however, that the Fed will apply the policy to assets it owns as collateral for government loans extended to American International Group Inc. and Bear Stearns last year. The Fed provided $30 billion in funding to assist J.P. Morgan Chase & Co. to take over Bear Stearns in March, as part of an effort to stem further erosion of the financial markets.
The measures come against the backdrop of larger moves by regulators to contain damage from the meltdown in the credit markets. Of the $700 billion bank bailout program launched in October, $250 billion has already gone into buying large minority stakes in financial institutions. In addition to the Fed's actions, the Treasury Department plans to spend between $50 billion and $100 billion of the second half of the $700 billion bank bailout bill to modify mortgages for troubled homeowners.
In the case of whole mortgages owned by the Fed, the agency will immediately take steps to provide homeowner relief. For debt that is part of mortgage securities, the Fed will encourage the mortgage servicer of the securities to implement a loan modification policy. The Fed said it would also "assist" the servicer to modify mortgages. With mortgage securities, the Fed will "support" loan modifications that are offered to borrowers who otherwise would default on the loans yet could sustain the modified loan payments.
Democratic lawmakers and some Republicans have been pushing for government assistance to help mitigate foreclosures because they believe rising foreclosures are a key contributor to the financial crisis. "I'm delighted to hear the news," said Senate Banking Committee Chairman Christopher Dodd, D-Conn. "Until you put a tourniquet on the foreclosures problem in this country you're not going to get to the bottom of this financial crisis." He argued that the provision was required as part of an Oct. 3 bank bailout bill.
Dodd added that more efforts are necessary. He recommended that government regulators consider additional programs such as a $24.4 billion mortgage foreclosure mitigation proposal introduced by Federal Deposit Insurance Chairwoman Sheila Bair. Bair, who will remain chairwoman of the FDIC, argues that her program could help 1.5 million homeowners avoid foreclosure.
