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FDIC Chief Calls for Freeze on
Adjustable-Rate Resets

Oct. 5, 2007 (EIRNS)—Sheila Blair, the Chairman of the Federal Deposit Insurance Corp (FDIC, the nation's bank regulation agency), showed today her recognition that the mortgage crisis is out of control, but offered another "solution" that can't work. Blair proposed that all adjustable-rate mortgages (ARMs) which are scheduled to reset to a higher rate, should be frozen, with the exception of those whose owners are not living in their homes. "Keep it at the starter rate," she told an investors conference, as reported by CNNMoney. "Convert it to a fixed rate. Make it permanent, and get on with it." Blair revealed the level of panic in the banking system: "We can't just sit here doing this kind of case-by-case, laborious restructuring process with all these millions of subprime hybrid ARMs," she said, noting that 1.3 million subprime ARMs are due for a reset by the end of 2008.

The plan was greeted with praise by Michael Shea, the executive director of ACORN Housing, a non-profit which helps people obtain fair mortgages.

Lyndon LaRouche's answer to Blair is contained in an Oct. 5 www.larouchepac.com posting (no longer available).