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Sheila Bair, the head of the FDIC continues to buck the Bush Administration and call for about $25 Billion of the $700 Billion bailout package to be used to insure banks and give them more incentive to modify the loans of more troubled homeowners. Here is an excerpt from a recent AP story:

FDIC Chairman Sheila Bair said Thursday she is “still hopeful” of using federal bailout money to help homeowners avoid foreclosure.

“The issue is whether it’s an appropriate use of (Treasury bailout) funds or not, we think it is,” Bair said in a breakfast speech hosted by the Johns Hopkins University Carey Business School. “We think it’s a good investment and so we are meeting with both Congress and the Secretary of the Treasury on that still.”

When asked about resistance from Treasury Secretary Henry Paulson, Bair said: “We have a great working relationship and I’m still talking with him. So, still hopeful.”

The FDIC chairman has broken with the Bush administration in calling for using $24 billion of the bailout money to help Americans at risk of losing their homes. House Speaker Nancy Pelosi is urging Paulson to support the FDIC plan.

Federal Reserve Chairman Ben Bernanke told lawmakers earlier this week that in cases of some home loans, the FDIC plan could be costly but is still a “very promising approach.” While resistant to using bailout money to provide mortgage guarantees, Paulson has said the administration will look for ways to provide foreclosure relief.

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