EconomicCrisis.US

Washington – US central bank head Ben Bernanke on Wednesday rejected the idea that the government plans to nationalize major US banks in danger of collapse, during a second day of testimony before legislators.

The Federal Reserve chairman insisted that President Barack Obama’s administration preferred to use public-private partnerships, which were temporary in nature and involved taking only a portion of banks’ shares in exchange for emergency government funds.

Nationalization involved completely shutting private shareholders out of the process, and ‘we don’t plan anything like that,’ Bernanke told the House Financial Services Committee.
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NEW YORK — Banks got bailed out. So did automakers. So why not struggling homeowners?

The question has struck a raw nerve across the country, with critics saying the Obama administration’s latest housing rescue rewards people who bought homes they couldn’t afford. Others counter that the taxpayer-financed plan will slow spiraling home prices and avert a deeper economic disaster.

The debate captures the strong emotions stirred up over who benefits as the government tries to fix the financial crisis. It’s likely to remain on the front burner for months as lawmakers consider other issues — such as whether bankruptcy judges should be given the power to impose changes on borrowers’ home loans.
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Billionaire investor George Soros said the current economic upheaval has its roots in the financial deregulation of the 1980s and signals the end of a free-market model that has since dominated capitalist countries.

Liberalization of the financial industry begun by the Reagan administration has led to a series of crises forcing government intervention, Soros told economists and bankers at a Feb. 20 private dinner at Columbia University in New York. The global recession, triggered by the collapse of the U.S. housing market, has “damaged the financial system itself,” he said.
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A massive US government stabilization plan for the battered housing market unveiled Wednesday takes aim at the epicenter of the global financial crisis with hundreds of billions of dollars.

The initiative is designed to stem a rising flood of foreclosures and help between seven and nine million homeowners restructure or refinance their mortgages to avoid losing their homes, the Treasury Department said.

“The plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs,” it said in a statement.
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