Obama administration changes approach on economy

What a difference a total change of government makes! We're speaking, of course, of Tuesday's announcement by the Federal Reserve that it would begin taking measures aimed at easing the foreclosure crisis in the United States. Nearly 1 million foreclosed homes already are on the depressed housing market and as many as 3 million more homes could be added in 2009, according to the Reuters international news service. The Fed was supposed reduce the foreclosure rate when Congress approved the Bush administration's $700 billion bank bailout last year, but did not move significantly in that direction when the first $350 billion was distributed. But new U.S. President Barak Obama wants at least some of the second $350 billion outlay to go to foreclosure relief, and the Fed has responded positively. "The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank," Fed Chairman Ben Bernanke said Tuesday in a letter to Rep. Barney Frank, chairman of the financial services committee of the House of Representatives. Bernanke also said the new efforts would include $74 billion in assets purchased last year when the government bailed out investment bank Bear Stearns and giant insurer American International Group. Frank, a Democratic lawmaker from Massachusetts, applauded the Fed's policy change as a "major breakthrough," Reuters said. "We just had very good news from Mr. Bernanke from the Federal Reserve, who has just announced a very significant increase in Federal Reserve policies to reduce foreclosures," Frank told MSNBC television. Sen. Christopher Dodd, chairman of the Senate Banking Committee, said he was "delighted" by the Fed's decision. "We have been trying to get, as you know, for some time in the previous administration for them to take steps on foreclosure mitigation. "They refused to do so for whatever reason. I am very pleased that the Fed is stepping up." Specifically, the Fed said it would help mortgage companies modify loans at risk of default and purchase up to $500 billion worth of mortgage-backed securities to free up money for new home buyers.