The Federal Reserve’s decision to bail out the investment bank Bear Stearns is coming under criticism from housing advocates who say the Bush administration has done too little to help homeowners facing foreclosure. Over the weekend, the Fed took extraordinary measures to help JPMorgan purchase Bear Stearns and save the nation’s fifth largest investment bank from collapse. As part of the deal, the Fed put up $30 billion to guarantee Bear Stearns riskiest investments. Jim Carr of the National Community Reinvestment Coalition said, “It’s almost stunning to witness the shoring up of a major financial institution, but not addressing the problem that the quality of housing assets is deteriorating with each minute we wait.”
On Monday, reporters questioned White House Press Secretary Dana Perino about the bailout.
Reporter: “But people who are facing, say, foreclosures, individuals, the little guys who are facing their foreclosure, are looking at the big guys getting government, if not brokered, certainly they’re overseeing deals that are engineered to sort of keep the big picture financial community afloat, and they’re saying, well, where’s my boost of liquidity?”
Dana Perino: “They’re going to get that boost of liquidity in the form of a stimulus package and a tax rebate that’s coming to them the second week of May.”
Reporter: “But that’s not going to save their houses.”
President Bush praised the Federal Reserve’s actions.
President Bush: “One thing is for certain: we’re in challenging times. But another thing is for certain, that we’ve taken strong and decisive action. The Federal Reserve has moved quickly to bring order to the financial markets. Secretary Paulson has been-is supportive of that action, as am I. And I want to thank you, Mr. Secretary, for working over the weekend…”
Meanwhile, Alan Greenspan, the former chair of the Federal Reserve, says the current economic crisis is “likely to be judged in retrospect as the most wrenching since the end of the Second World War.”