Ben Bernanke, Chairman of the Federal Reserve, declined to comment on the controversial plan to use eminent domain law to help underwater homeowners today when California Congresswoman Maxine Waters grilled him on the subject at a House Financial Services Committee meeting, covered by CNBC (see video above).
The plan, originally proposed by San Francisco-based investment firm Mortgage Resolution Partners, calls for local governments to buy mortgages at the fair market value of their corresponding homes. The government would then help the homeowner refinance the mortgage and unburden them from underwater loans.
“[The plan] raises legal issues that I am just not qualified to comment on,” Bernanke said. “It’s a very difficult set of problems that they are facing and I am very sympathetic to their attempts to try and address it [sic] but whether this is a good vehicle or not, I am simply not qualified enough to answer the question,” Bernake said.
The plan, which is gaining support in parts of California, has been championed by Robert Schiller, the Yale economics professor and co-creator of the S &P/Case-Shiller Index. It has also been denounced by Wall Street lobbyists who fear the ramifications of government seizing private property. [CNBC] – Christopher Cameron