Tim Geithner Backs Foreclosure Aid As Clock Ticks Down

The U.S. Treasury Department has spent months blocking legal aid funding for borrowers fighting foreclosure, but is giving a late push to legislation that would expand its authority to help homeowners. In a bruising appearance before the Congressional Oversight Panel on Thursday, Treasury Secretary Timothy Geithner was accused of "covering for something" with current foreclosure policies. Now, as the clock runs down, the Treasury chief is throwing his support behind legislation that would extend millions of dollars in critical funding to homeowners in the states hit hardest by the foreclosure crisis.


Geithner has insisted that the Treasury does not have the legal authority to allow bailout money to be spent on legal bills for borrowers. That creates a difficult situation for the Obama administration's clunky foreclosure relief program, which often requires homeowners to undergo years of legal wrangling to achieve its stated goals.

But Treasury spokesman Steve Adamske says Geithner "enthusiastically supports" legislation from Rep. Marcy Kaptur (D-Ohio) that would explicitly grant Treasury the right to extend legal aid to foreclosure victims.

"I talked to Geithner, in fact, and Geithner agreed to support it," House Financial Services Committee Chairman Barney Frank (D-Mass.) told The Huffington Post. "I'm told Bachus was for it, but Boehner objected, even though it's no more money," Frank added, referring to the incoming committee chair Spencer Bachus (R-Ala.) and incoming Speaker John Boehner (R-Ohio).

Treasury has approved $7.6 billion in foreclosure relief funds to states hit hardest by the housing crash. The legislation would allow those states to use the funding for legal aid programs.

The bill is expected to be considered Friday under a special legislative fast-track requiring a two-thirds majority for passage. The legislation faces a difficult path forward with Boehner opposed to it, even though his state features one of the highest foreclosure rates in the country.

"This bill re-opens the TARP bailout fund for 'legal aid' programs, which could result in millions of taxpayer dollars being pumped into groups similar to ACORN," Boehner spokesman Michael Steel told HuffPost.

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