Refinancing Lenders and the TARP
The approval of the US government TARP program was supposed to help support the stabilization of the credit markets. $700 billion was approved and earmarked for financial entities in trouble due to the holding of huge amounts of bad mortgage debts. The plan would help many banks and home mortgage companies, along with refinancing lenders.
Unfortunately, the architect of the TARP, Henry Paulson, later revealed that the program would not be buying up the bad mortgage debts. Instead, the TARP funds will be utilized to invest in bank’s preferred stock. Whether this helps to stimulate refinancing lenders to lend more in the future is hard to guess, but the change in direction will most likely lead to a prolonged belt tightening in the mortgage lending business.