Dodd, Banking Dems to Bush, Paulson: Use Bailout Fund to Prevent Foreclosures

Senate Banking Committee Chairman Chris Dodd (D-Conn.) and other Democrats on the committee today called on President Bush and Treasury Secretary Henry Paulson to use some of the $700 billion to help prevent foreclosures, pressing the president for swift action.

“The fact remains that the Administration has not dedicated the time, attention or resources needed to address the cause of the crisis — the historic levels of foreclosure,” the senators wrote in a letter to Bush and Paulson.

The group of senators–comprised of Dodd, Charles Schumer (N.Y.), Jack Reed (R.I.), Tim Johnson (S.D.), Tom Carper (Del.), Robert Menendez (N.J.), Daniel Akaka (Hawaii), Sherrod Brown (Ohio), and Robert Casey (Pa.)–proposed the administration modify existing mortgages to help keep homeowners in their homes.

The administration has focused too narrowly on shoring up financial institutions as it implements the bailout, the senators alleged.

“Rather, it has focused almost exclusively on the symptoms of the crisis — financial arteries clogged with bad mortgage-backed debt and housing-related losses undermining the capital positions of our financial institutions,” they wrote.

The committee examined the administration’s use of the bailout fund in an oversight hearing last week.