Oversight panel discussed TARP housing options

WASHINGTON Wed Dec 31, 2008 1:01pm EST

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WASHINGTON (Reuters) - The board charged with oversight of the U.S. Treasury's $700 billion financial rescue fund discussed possible methods of using it to help mitigate foreclosures and supplement other housing stability efforts, minutes of a December 10 meeting showed on Wednesday.

The minutes of the Financial Stability Oversight Board, released by the Treasury, also showed that members discussed the difficulties associated with identifying and isolating the effects of the $700 billion Troubled Asset Relief Program from other U.S. government financial support efforts.

The board is headed by Federal Reserve Chairman Ben Bernanke, and includes Treasury Secretary Henry Paulson, Securities and Exchange Commission Chairman Christopher Cox, Housing and Urban Development Secretary Steven Preston and Federal Housing Finance Agency chairman James Lockhart.

The minutes said they discussed the types of metrics that might be useful in assessing the effectiveness of the TARP fund in restoring financial system stability and protecting home values, but it did not identify any of these metrics.

The minutes also did not include any specific actions for using the TARP to supplement housing stability efforts and foreclosure mitigation.

Paulson has said Congress will need to approve the second $350 billion tranche of the TARP fund, which was approved by Congress in early October.

As of this week, the Treasury has earmarked more than the initial $350 billion with the disbursement of $6 million in aid for auto finance firm GMAC, but it has not yet spent the entire $350 billion. Not all of the $250 billion in funds earmarked for bank capital injections has been disbursed.

Congressional leaders have said they want the second $350 billion in TARP funds to include spending to reduce home mortgage foreclosures.

"Members also discussed the importance of developing a strategy for the eventual sale or other disposition of the assets acquired by the TARP and the actions taken to provide for such sales or dispositions to occur in a timely and orderly fashion," the minutes added.

(Reporting by David Lawder, Editing by Chizu Nomiyama)

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