Foreclosures are key element missing in plan
$700 billion bailout likely to offer little help for struggling homeowners

ANALYSIS
By John W. Schoen
Senior producer
MSNBC
updated 7:08 a.m. ET, Mon., Sept. 29, 2008
Hard as it is to believe, even a $700 billion bailout may not be enough to dig the economy and financial markets out of the hole they're in.

By committing such a staggering sum to end the widening financial crisis, Congress and the White House are hoping to deliver a swift knockout punch to the fear gripping the global markets and economy. But to win bipartisan support, key provisions have been watered down or left vague — including any efforts to stop the wave of foreclosures at the heart of the meltdown.

Much of the debate — and opposition to the plan — centered on Treasury Secretary Henry Paulson’s original request for sweeping powers to spend hundreds of billions of taxpayer dollars on mortgage-backed securities that are unable to attract other buyers.

Opponents of the Treasury's original three-page proposal who balked at the lack of oversight have won provisions that place controls over the purchase process. The plan involves creation of a Financial Stability Oversight Board that includes Federal Reserve Chairman Ben Bernanke, which will report regularly to a newly created congressional committee. Details of individual transactions involving taxpayer dollars will be disclosed.

The hope is that after the government jump-starts the market with massive purchases of the riskiest paper, private investors will follow, unfreezing trillions of dollars in capital that has fled to safety until the full scope of the crisis can be determined.

But it's not clear exactly how the mechanics of the plan will work; some of those details are still being finalized. Too much oversight could slow the government response — market panics don’t wait for government hearings. Treasury officials on a conference call with reporters Sunday deflected questions on “implementation.â€