Representative Barney Frank wants to make release of the remaining $350 billion of TARP funds conditional on helping more homeowners avoid foreclosure. “We should have an agreement among Obama, Paulson and the congressional leadership to release the $350 billion with conditions on how it’s spent,” Frank said. “We need the second $350 billion, but it can only be done if there’s an agreement as to how to do it.”
Sounds like a good idea, but we have some pre-conditions which represent nothing more than fairness and common sense.
First, any homeowner receiving foreclosure relief must have their original mortgage applications checked for any misleading statements on income, debts etc. If that homeowner is found to have lied on his or her application then no assistance should be provided. No homeowner should gain access taxpayer funds in order keep a purchase made under fraudulent pretenses. Lying on a mortgage application is a crime and should not be rewarded.
Second, any troubled borrower who "cashed out" on their mortgage and spent the funds on frivolous non-essentials must not be bailed out. Those items should include expensive home additions such as swimming pools along with cars, boats, vacations and the like. If the funds were used to pay for essential needs, such as a child's education or medical expenses, relief should be provided if it can be but we find the idea of a homeowner relaxing by their taxpayer-supported pool between trips to the mall in their Escalade to be a repulsive idea.
Meanwhile, stocks were mixed on Friday and a less-volatile day was seen on thin holiday volume. At the close of floor trading on the NYSE, the DOW was on 8579.11 after falling 25.88 points (-0.30%). The S&P closed on 887.88, up 2.60 points (0.29%) while the NASDAQ finished the day's trading on 1564.32 with a gain of 11.95 points (0.77%). Bonds had a rare down day on both ends of the yield curve as stocks flucuated. The yield on the 2-year note gained 5.4 basis points to 0.732% while yield on the benchmark 10-year note rose 4.7 basis points to 2.119%. The dollar found momentum on what looked like a risk-aversion move, gaining 2.20% on the euro, 0.53% against the pound, 0.54% on the Australia's dollar while it fell 0.32% against the yen.
NYMEX crude for January delivery fell $3.05 (-8.42%) to $33.17 per barrel, its lowest level since July 2004.
COMEX gold for February delivery declined $22.70 (-2.64%) to $836.90 per ounce as the dollar advanced.