FDIC, Treasury in dispute over aid for households

Washington: Publicly breaking with the Bush administration's official stance, the Federal Deposit Insurance Corp. (FDIC) proposed on Friday to use $24 billion (Dh88.17 billion) in government funding to help 1.5 million American households avoid foreclosure.

Where to find that money, though, is in dispute. FDIC officials want to use part of the $700 billion bailout of the financial industry to pay for it. But the Treasury Department is opposed to that idea.

Testifying on Capitol Hill Friday, Neel Kashkari, the Treasury Department's assistant secretary for financial stability, said the aim of the $700 billion plan was to make investments with the hope of getting the money back.

That he said, was "fundamentally different from just having a government spending programme" that would disburse money with no chance of ever seeing any returns.

Prevention initiative

With the Bush administration adamantly opposed, Congressional Democrats could take up the FDIC's plan when they return for a lame-duck session this week. Or the plan could set the stage for a new foreclosure prevention initiative once President-elect Barack Obama takes office in January.

At Friday's hearing, lawmakers complained that the Bush administration was ignoring the will of the Cong-ress and slighting homeowners on the verge of foreclosure in its latest approach to spend $700 billion in economic rescue money.