Panel II of a House Financial Services Committee Hearing - Oversight of Implementation of the Emergency Economic Stabilization Act 2008 and of Government Lending and Insurance Facilities; Impact on Economy and Credit Availability

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REP. GREGORY MEEKS (D-NY): Thank you, Mr. Chairman. Good to see you.

Let me start off by asking this question. And there were some questions earlier to the first panel, initially by my colleague, Ms. Waters, where I think we are suffering from the same problem and that is when you look at the number of constituents who are being foreclosed upon and in trying to help them, it has been very difficult. It is very difficult working with servicers in getting final information, et cetera, so that we could make sure that we're preserving them and giving them every opportunity to stay in that home.

To that end, in my district, I joined hands with a local community organization -- CWE -- who every week they come in with lawyers and financial consultants. They speak to my constituents -- and the numbers have just gone astronomically -- and then they call the banks and work things out. And I've called them, my community banks, et cetera, to let them know when they hear from this group to make sure that -- see if there can be something worked out.

As a result, I can tell you, when we put this program in place as a pilot program about three weeks ago, there were about eight homes that I know was about to go into auction the next day. We were able to save those people -- save those people from foreclosure. They stayed in their homes.

So my first question therein is, as opposed to just relying on the Hope program, has there ever been any consideration, especially with community banks who've been to -- a great -- that are responsive, to partnering with some community-based organizations who are on the ground?

Because we find oftentimes with the -- a number of -- financial institutions, when they get something from them, it just goes right into the garbage can. And they need someone -- you know, they're trying to figure someone to trust. We found that they -- there's a trust factor that has been missing, and they trust someone else. They trust coming into my office.

So my first question is has there been any consideration about trying to partner with community-based organizations in communities to help people stay in their homes?

MS. BLANKENSHIP: I don't know of any formal effort that we have at this time, but I will tell you that most community banks have a personal relationship with that borrower.

And as I stated in my testimony, we do everything we can to avoid foreclosure. And I think if you would look at the statistics, that you will find that in the community banks, there are going to be a less percentage of foreclosures simply because we do have that relationship, if the customer will come in.

I think it would be beneficial to have an organization to which you speak that could encourage those borrowers who are sometimes intimidated when they go into default to communicate with the bank. Because once we get communication, then it would be rare that we couldn't find a solution.

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REP. MEEKS: Let me ask this question real quick, because I wanted to ask this of Secretary Paulson. But let me ask you; maybe it has had effect with you.

Given that Secretary Paulson has unilaterally decided not to purchase the toxic assets, are you concerned at all with the position that may reverse, you know, not buying this, LIBOR rates?

You know, this is an international market now, and by not buying this, it could change. We had some stability, and now things have changed. Does that give you any concern?

MR. YINGLING: As it turns out, LIBOR rates have come down rather significantly, and are back to a stable level. We think that the Treasury did the right thing with their capital infusion, but we also think that they ought to review the other opportunities.

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