Financial Meltdown Update: Washington transit, bank reach agreement on $43M

Washington transit, bank reach agreement on $43M

WASHINGTON — The Washington transit system reached an agreement Friday with a Belgian bank seeking $43 million from a financing deal gone bad after the near collapse of insurer American International Group. The settlement may help other transit agencies facing billions of dollars in similar costs. The Washington Metro system and KBC Group made the deal after three days of talks overseen by a federal judge. Terms were not disclosed on the judge’s instructions, but both sides said they were pleased with the outcome.

FDIC seeks $24B to stop private foreclosures

WASHINGTON — Publicly breaking with the Bush administration’s official stance, the Federal Deposit Insurance Corp. proposed Friday to use $24 billion in government funding to help 1.5 million American households avoid foreclosure. Where to find that money, though, is in dispute. FDIC officials want to use part of the $700 billion bailout of the financial industry to pay for it. But the Treasury Department is opposed to that idea.

Legislators charge Treasury with disregard

WASHINGTON — Lawmakers complained Friday that the Bush administration is ignoring the will of Congress and slighting homeowners on the verge of foreclosure in its latest approach to spending $700 billion in economic rescue money. In the sole hearing on Capitol Hill Friday, Rep. Darrell Issa, R-Calif., and others took turns pressing Neel Kashkari, Treasury’s interim head of the $700 billion bailout package. Kashkari defended the shift.

Mayors request bailout aid for cities

WASHINGTON — Three big city mayors asked the federal government Friday to use a portion of the $700 billion financial bailout to assist struggling cities. They sought help with the pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis. The mayors — Michael Nutter of Philadelphia, Shirley Franklin of Atlanta and Phil Gordon of Phoenix — made their request in a letter to Treasury Secretary Henry Paulson.

Insurers want to buy thrifts, get funds

WASHINGTON — Four insurance companies on Friday asked the government to allow them to buy thrifts so they can qualify to receive federal money under the financial rescue program. Hartford Financial Services Group Inc., Genworth Financial Inc., Lincoln National Corp. and Aegon NV, a Dutch company that owns U.S. insurer Transamerica, each asked the Office of Thrift Supervision for permission to acquire an existing savings and loan. The deadline for filing applications was Friday. The Treasury Department agency said it received submissions from those four firms to become thrift holding companies by acquiring savings and loans.

Treasury fraud inspector nominee named

WASHINGTON — The young prosecutor chosen to monitor the $700 billion financial rescue plan has brought down Colombian drug traffickers, gone after swindling corporate executives and now heads the mortgage fraud unit for the U.S. attorney’s office in Manhattan. On Friday, President George W. Bush nominated Assistant U.S. Attorney Neil M. Barofsky to become the Treasury Department’s special inspector general in charge of auditing and investigating how the federal government spends bailout money. The pick requires Senate confirmation.

From Wire Reports

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