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Foreclosures Seen as One of the Main Reasons Behind the Economic Crisis

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By : Cassiano Travareli    99 or more times read
As the country sees itself continually dip lower amid the economic slowdown, many Americans ask how such a catastrophe could happen to a powerful and strong nation such as ours.

This situation could have been avoided had the government and other institutions protected the homeowner. Now more then ever, more are facing the threat of having foreclosed homes. Recognizing and understanding errors made in the past will help fix the system and improve the countryís economic performance.

The governmentís failure to limit foreclosures is tragic. There are more foreclosed properties now as it had been years ago. Had the government heeded the warnings from people like Representative Barney Frank, Democrat of Massachusetts, and Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, the number of foreclosed homes would have been less. Moreover, the Treasury of Congress did not extend help to those facing risks of foreclosures, failing to protect homes and properties, and in turn, pulling the economy further down.

Also, the mismanagement of the Troubled Asset Relief Program damaged the economy badly as it was not able to lessen cases of foreclosure. Former Treasury secretary Henry M. Paulson Jr. decided to use TARPís first $350 billion to inject capital into banks, instead of buying troubled assets and mitigate foreclosures. The new secretary should focus on the true purpose of TARP.

These fateful decisions have contributed to what most homeowners are now facing, and this is the threat of having a foreclosed home. Although several government and private institutions have already been taking actions on helping homeowners, the situation is still grim.

If strong actions to limit foreclosures were taken right away, and if the TARP funds were used as directed, the economy would have looked far less severe than it is today. More importantly, Americans would not be in such a difficult situation. Financial leaders, both in the government and in private institutions, should then step up to address the problem of foreclosure.
Cassiano Travareli has been educated in the finer points of the foreclosures market over 5 years.

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