Big WWF Match Between FDIC And Fed At Congress Hearings

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Hank Paulson and FDIC chief Sheila Bair got into a fight over how the $700 billion bailout package should be used. Congress had a ring side seat.

A little color from MarketWatch:

"The root cause of the current economic crisis [is] the failure to deal effectively with unaffordable loans and unnecessary foreclosures," Bair said to lawmakers at a House Financial Services Committee TARP oversight hearing.

She noted that the rescue package approved by Congress "specifically provides" Paulson with the power to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.
Instead, Paulson said he is sticking with his plan to use the first half of the allocated government capital, $350 billion, to buy significant minority stakes in large, mid-sized and small financial institutions. This approach is starkly different from Paulson’s initial strategy in September to use the capital to buy illiquid mortgage backed securities.
Douglas A. McIntyre