Foreclosure Clunk The Economy

Posted on April 27th, 2009 by saman

The secretary of Treasury, Timothy Geithner expressed his concern and put forth few ways to lift up the current economy status of US. Earlier he sketched out some plan to bring up the besieged status up, but it did not reach the market as expected.

Sources of treasury department says that Tim’s plan is to spawn $1 trillion and also to remove $500 billion-$1 trillion of toxic assets from banks’ balance sheets. His main aim is to concentrate on bringing transparency in the foreclosure prevention plans among public, initiating small-business and community lending and also to provide assistance to the investors in public-private sector. All these plans are made to eradicate or at least prevent foreclosure from happening. Though all these plans sounds highly effective, most of the analysts are worried when they think about the failure plan of Tim during Bush’s administration.

Tim along with the chairman of federal reserve, Ben Bernanke have planned to work with the country’s law makers on lucid plans in order to bring up the current economy status that is under a mess. They are expected to focus on the business strategies, improvisation on the model of bank balance sheets thereby flooding up the banking industry to lift up the economy of the country.

Few stability plans to reinforce the finance includes; accessing the strength of the nation’s biggest banks, providing fund for bad assets and bringing a sign of relief to all those who have been trapped by ‘Foreclosure’.

According to Timothy Geithner, the country largest banks which reflect the changing economy of the country will undergo a ‘stress test’ to validate the value of their balance sheets. But here Geithner has failed to suggest, what will happen once the test is done. Also, he has said that funds can be provided to the bad assets so that those real-estates under the threat of going down will have this as a support and will make a good start. Added to all these his idea on bringing down the mortgage rates pings the negative reaction of the experts where they want to hammer out the plans as soon as possible.

In all these suggestions provided by Geithner, the analysts and CEO of various federal banks show their dissatisfaction saying that the plan would rather be a failure as they feel that Geithner is trying to showcase a trend that is not at all in practice. They also say that these plans will not at all suit the current marketing strategy to avoid foreclosure. In all the plans put forth, there is no idea of how the plans will be implemented. These plans just sound as a suggestion and an answer when someone asks, ’How the country is going to avoid foreclosure?’. But the in-depth analysis does not provide a proper solution to the problem.

Besides all these plans and discussions, the current financial crisis creates an emergency and pricks on the other hand that some appropriate policy has to be flagged up and implemented in action immediately to avoid the country from foreclosure threats.