FDIC's Bair raps US govt for not helping homeowners-WSJ

Oct 16 (Reuters) - The U.S. government's $700 billion rescue package will help stabilise financial markets but it doesn't do enough to address home foreclosures, Federal Deposit Insurance Corp Chairman Sheila Bair was quoted as saying on Wednesday.

"Why there's been such a political focus on making sure we're not unduly helping borrowers but then we're providing all this massive assistance at the institutional level, I don't understand it," Bair told the Wall Street Journal in an interview.

Bair didn't single out government officials or leaders, but her criticisms brushed on decisions made by both the Bush administration and Congress, the paper said.

"I support all the measures; I've been a part of all the measures that have been taken," she said.

"But we're attacking it at the institution level as opposed to the borrower level, and it's the borrowers defaulting."

Bair's comments came amid growing tensions with key policymakers in resolving the financial crisis, notably Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, the paper said citing people familiar with the matter.

The Bush administration defended the measure.

"We just did a massive bill that does a lot for homeowners," the paper quoted White House spokesman Tony Fratto as saying. (Reporting by Ajay Kamalakaran in Bangalore)