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While Bailout Bills Vary from Senate to House, Neither Would Stem Foreclosures

Byline: Matthew Russell Lee of Inner City Press in DC: News Analysis

WASHINGTON DC, September 22 -- With Capitol Hill echoing with competing offers of billions of dollars to banks, and even sovereign wealth funds, splits have emerged between the Senate and House of Representatives versions of the bailout proposal. Inner City Press has obtained copies of both drafts and puts them online here (Senate) and here (House).

  The House of Representatives version nearly entirely tracks the Treasury Department's and Federal Reserve's proposal, including virtually no consumer protections or even attempts to stem the flow of foreclosures at the root of the financial meltdown. The Senate version takes a few halting steps in those directions. But since a vast majority of the mortgage loans at issue have been securitized, it seems that under either pending version, few loan modifications will be possible.

  Meanwhile the Federal Reserve is in a frenzy of approvals, bailouts and takeovers, allowing public comment on none of them. Most recently on the night of September 21, the Fed gave bank holding company status to Goldman Sachs and Morgan Stanley. Normally, that requires a public comment period, including under the Community Reinvestment Act. But the Fed ignored those requirements. It's as if otherwise applicable banking laws have been suspended or repealed.

Fed's Bernanke: forget the law, I want to run AIG

  On the Community Reinvestment Act, known as CRA, contrary to many of the claims now being made, the that CRA law triggered the subprime crisis, it must be noted that while conglomerates like Citigroup and HSBC own subprime subsidiaries, CitiFinancial and the ex-Household Financial, and banks subject to the CRA, they never sought CRA credit for the subprime loans they made. They did not make the high-rate loans to comply with CRA.

  Likewise with AIG, which owns a saving bank subject to CRA, as well as subprime lenders under the American General and other brands. Now that the Federal Reserve has taken a 79% stake in AIG in exchange for its $85 billion bailout through the Federal Reserve Bank of New York, Fair Finance Watch has raised the issue of the Fed's duty to operate this questionable lending operation responsibly. These issues will be raised to Federal Reserve chairman Ben Bernanke, including Monday afternoon. Watch this site.

Watch this site, and this Sept. 18 (UN) debate.

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These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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