We continue to see a number of people exclaiming that the government bailed out the banks but did nothing or very little to help the homeowner. Is that true?

The Bush administration received Congressional approval to establish the Troubled Asset Relief Program (TARP), funded by $700 billion which was later reduced to $475 billion. From these funds the banking institutions received $245 billion, and $50 billion was allocated to help homeowners avoid foreclosure. The remaining funds have been loaned to the auto industry and AIG, which had insured credit swaps that defaulted.

All of the monies advanced to banks have been repaid with the exception of a few millions lost on small banks. The Treasury had a net profit of $25 billion on the bank loans. AIG expects to repay the balance owed by the end of this year.

The $50 billion from TARP was added to $25 billion from Fannie Mae and Freddie Mac to help homeowners avoid foreclosure by paying down part of their mortgage under the Home Affordable Modification Program (HAMP). So far the program has had mixed results because the process is very slow, and more than 150,000 owners have defaulted a second time after the modification. The entire $75 billion will be a loss for the Treasury since none of it is to be repaid.

The Obama administration has caused the largest mortgage servicing banks to agree to distribute over the next three years a total of $20 billion to homeowners whose homes were foreclosed in a manner that may have circumvented some legal steps.

Finally, the Federal Reserve Bank has pushed down interest rates to historical lows. These low rates are benefiting homeowners who are able to refinance while at the same time having an adverse effect on bank profits.

Gene Jacobs

Pinehurst