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Federal Panel Considers Economic Issues for the Las Vegas Housing Crisis

December 18th, 2008

Nevada has quickly deteriorated from a boomtown to a place on the brink of economic disaster, and a federal bailout of financial institutions has done little to reverse the trend, a congressional panel was told. “Our economy has gone from the fastest growing in the nation to amongst the worst,” state banking commissioner George Burns testified Tuesday at a meeting of a panel charged with reviewing the use of the $700 billion Wall Street rescue fund. The meeting attracting banking and housing experts and politicians was the first outside Washington for the four-member panel. The recent financial reform bills have focused on making home loan lenders for accountable with increased responsibility. have It comes a week after the group released a report raising questions about the effectiveness of the Treasury Department’s bailout program and its lack of transparency.

The panel is composed of Democratic appointees Richard H. Neiman, superintendent of banks in New York, Elizabeth Warren of Harvard Law School and Damon Silvers, associate general counsel for the AFL-CIO; and Republican Rep. Jeb Hensarling of Texas. Sen. Judd Gregg, another Republican, had been in the group but left it last month, citing the heavy legislative workload facing the Senate. Only the Democratic appointees traveled to Las Vegas, at the urging of Sen. Harry Reid, D-Nev. Few places have been hit as hard by the credit squeeze and the foreclosure crisis. “We need to know how the Wall Street bailout looks from here. Has it worked?” Silvers asked. The answer from those in attendance was a solid no.

In her comments, Rep. Shelley Berkley, D-Nev., said “there is no discernible impact” in Nevada from the bailout money. A $250 billion capital injection program has not yet helped small, community banks that could be in a strong position to encourage lenders to lend more money, said Bill Uffelman, president of the Nevada Bankers Association. The program hasn’t decided on appropriate guidelines for eligibility for the funds. Uffelman said smaller institutions weren’t getting the assistance that was so quickly offered to the large financial institutions whose near-failure prompted the federal action. “It seems to be a matter of too big to fail versus too small to matter,” he said.

Gail Burks, the president of Nevada Fair Housing Center, said her nonprofit receives 600 calls a day from homeowners seeking to prevent foreclosure. She said a typical loan modification takes about 200 hours of staff time. Burks said mortgage modifications should be streamlined and made mandatory for lenders that accept federal aid money. Reid later told reporters he supported mandatory modifications. He also endorsed a 90-day moratorium on foreclosures to give homeowners “breathing room.”

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