"Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy,"
Since when have "Good Faith efforts" involved handing over more than $3 Trillion of U.S. citizens' tax dollars to the private financial sector to bolster their balance sheets, use the money to acquire smaller institutions and try to cover their collective behinds for when the Godzilla of Derivatives arrives on Wall St.? I imagine he is also including the U.S. Treasury as one of the institutions who made such "good faith efforts." The private sector is "incapable of coping with the crisis on it's own" even though it was these same private sector institutions that caused the economic quagmire we are neck deep in.
Right now, there are $14.8 Trillion in outstanding mortgages in the U.S. The mortgage delinquency rate is 6.41% and rising at an ever increasing rate. Estimates put the percentage of homeowners whose property is worth less than the mortgage they owe at 20%. There is $2.56 Trillion in outstanding consumer credit. Shouldn't the outstanding consumer debt have been addressed as a matter of top priority when Treasury opened the spigot of taxpayer money ? Three or four Trillion dollars would have been better spent bailing out more than 25% of the worst off homeowners by paying their mortgage off completely or spreading it amongst the entire population with outstanding mortgage payments to bring them back to the stage where they would actually have some disposable income. It's people with money in their pocket who keep an economy alive. More important that this, it would protect the most vulnerable from being thrown out on to the street after foreclosure. The "foreclosure rate remains too high" Ben, because you have done absolutely nothing to help homeowners pay off their mortgages.
Bernancke also criticizes lenders for not modifying mortgage conditions even if this would make apparent economic sense. He admits that lenders are not adjusting mortgages because of the amount of CDS's and derivatives that have been formulated on these same mortgages. This could lead to legal action being brought against the same institutions that sold these mortgages. So the proposal is to buy up delinquent mortgages from lenders using even more taxpayer money and then, through the "Hope for Homeowners" program, lend the money back to these same taxpayers. The irony seems to have escaped poor old Ben on this one. Why doesn't he just come straight out and call it the "Protect the Banks and Screw the Homeowners" program?