Last Friday, the Federal Deposit Insurance Corp, officially announced their plan to help prevent foreclosure. They want to use over $24 billion in government aid to assist an estimated 1.5 million Americans that are facing foreclosure. They want to use the $24 billion from the $700 billion already set aside for the financial market. However, the Treasury Department is strongly against this. The assistant secretary for the Treasury, Neel Kashkari, testified on Friday saying that the $700 billion was meant for creating new investments in the hope that the money would later come back through the market, which is "fundamentally different from just having a government spending program" aka for him, where money is put out without the possibility to later see it reenter the market.

During the hearing on Friday, lawmakers vented that the Bush Administration is not paying attention to Congress, and that their latest plan will slight homeowners. Congressional support is important, as they have the ability to block $350 billion of the $700 billion, or input new usage conditions/regulations. Democrats would like to see more money put towards the auto industry and distressed homeowners.

More details the FDIC plan were published on Friday, saying that it would guarantee over 2.2 million modified loans (risky loans made to those with poor credit or minuscule down payments) until the end of next year. These modifications would include reduced interest rates, or longer loan terms. The FDIC spoke out about their plan, with Michael Krimminger, the senior advisor to Chairwoman Sheila Bair saying, "If we can avoid those foreclosures, then you will get more stability in the housing market,". The FDIC reasons that government backing will sway lenders and make them more comfortable with loan modification as taxpayers will also take on loss if there is a repeat default by a borrower. Also, any loan servicing company which modifies a loan, would be paid $1,000 per loan. The FDIC also proposed that if 1/3 of the borrowers defaulted a second time, 1.5 million homes would still remain saved. They estimate that their program will apply to around 4.4 million loans that are in danger of becoming delinquent from now to the end of next year.