FDIC Chairman Sheila Bair told the Wall Street Journal she’s perplexed that so much attention has been focused on institutions, and not on assisting borrowers.

“I support all the measures; I’ve been a part of all the measures that have been taken,” she said. 

“But we’re attacking it at the institution level as opposed to the borrower level, and it’s the borrowers defaulting.”

You can read the full story at Reuters.

Last night, Dan Gilbert was interviewed by Neil Cavuto on Fox Business News’ highly popular “Your World” business news show.

During the interview, Dan Gilbert outlined the root problem that still persists at the center of the current financial crisis: The death spiral of mounting foreclosures, rapidly falling property values and billions of dollars in Option ARM loans set to start adjusting in early ‘09.

He also outlined his proposed solution, which would refinance the riskiest of those loans into a standard conforming 30-year fixed mortgage, without forgiving any principal — a key differentiator between Dan Gilbert’s solution and competing plans.

During the interview, Dan also took on the concern about rewarding homeowners who may have made bad mortgage decisions in past by pointing out that if foreclosures continue at the rate we are seeing, entire neighborhoods could be negatively impacted — including  the homeowners who have made their payments on time.

You can view the entire interview on Fox here.

Here’s what Walsh had to say about the plans:

The trick to making such a plan fly politically, Gilbert and Bancroft agreed, is convincing the 90% of homeowners who did not take out risky loans — and who dutifully pay bills on time — that they are not being punished for the sins of others.

Gilbert’s plan would not lower the loan principal owed by borrowers in trouble, he said, because that would be a red flag to people who are already pushing against rewarding irresponsible behavior.

While Bancroft’s plan would reduce the principal in some cases, the government would hold a 10-year lien on properties and reap 80% of the gains if home prices rebound beyond pre-slump levels. The goal is to stop the free-fall of prices, which is hurting everyone in what Gilbert called the “death spiral” in the market.

It’s not necessary to feel sympathy for people stuck in upside-down home loans.

And we need not feel bad for Quicken Loans, which has shrunk from 4,000 employees to about 3,200, even though it shied away from some of the riskiest loan products.

What we need is a solution that helps bring sanity back to housing, ASAP.

You can read the entire column by Tom Walsh here.

To read our complete Homeowner Rescue Plan, go here.

Excellent Op-Ed piece that appeared this morning on Bloomberg.com from columnist Caroline Baum. Baum takes a look at why Friday’s “emergency” legislation won’t be enough to solve the continued economic issues we’re faced with. Baum trots out a number of alternative plans that never saw the light of day as Congress rushed to enact the bailout bill last week. Interesting read.

Here’s what Baum says about Friday’s legislation:

There were much better ways to stabilize the financial system without turning the U.S. Treasury into the largest hedge fund extant. No one in Washington wanted to listen.

Former U.S. Treasury Secretary Paul O’Neill tried, only to have his calls unreturned. His idea was to guarantee the troubled assets instead of buying them, in the same way the government chose to guarantee money-market funds to stop the exodus.  …  Michael Aronstein, president of Marketfield Asset Management in New York, had another idea: Allow financial institutions to fund selected mortgage-related assets for a term of three years. “Get them financed in a way that isn’t volatile,” he said.

The legislation won’t arrest the plunge in home prices. There are too many homes and not enough buyers. To the extent that taking banks out of their bad assets gives them the wherewithal to make new loans, it may help at the margin.

At the same time, the economy is souring fast, and the pace of job losses is accelerating. Non-farm payrolls fell 159,000 last month, the ninth consecutive monthly decline. Private payrolls have fallen for 10 straight months. Rising unemployment will only exacerbate the problem.

You can read Baum’s full article here.

And you can find our version of a homeowner rescue plan here.

Watch the Interview!